The UK housing market is showing early signs of stabilisation as mortgage costs become more manageable, potentially setting the stage for activity to pick up in 2026. After a period of elevated rates, borrowing costs have eased in recent months, creating a more predictable environment for both buyers and property investors.
The UK housing market is showing early signs of stabilisation as mortgage costs become more manageable, potentially setting the stage for activity to pick up in 2026. After a period of elevated rates, borrowing costs have eased in recent months, creating a more predictable environment for both buyers and property investors.
According to Rightmove, the average two-year fixed mortgage rate sits around 4.33 per cent, down from about 5.08 per cent at the same point last year, while Rightmove also expects that new seller asking prices will rise by 2 per cent across 2026 as affordability improves and choice remains strong
This shift in pricing reflects not only lender competition but also broader economic conditions that have helped bring borrowing costs more into alignment with wage growth and longer-term household budgets.
Affordability has been one of the defining challenges of the past decade. However, the combination of falling mortgage rates and stronger wage growth has improved capacity for many would-be buyers. Nationwide recently observed annual house price growth in early 2026, underpinned in part by this improving affordability, and forecasted continued modest expansion
Complementing the pricing picture, Rightmove’s data shows that buyer choice is at a decade-high level, meaning prospective purchasers can compare a wider range of homes on the market. Key market watchers note that greater choice and more attractive financing conditions usually encourage transaction volumes to firm up, particularly when combined with traditional seasonal upticks in the spring and early summer.
From an investor perspective, easing mortgage costs do not necessarily imply rapid price jumps. Instead, they support activity by reducing the friction that once constrained both owner-occupiers and professional buyers. Increased remortgaging and product transfers, for example, are expected to contribute to a modest rise in overall mortgage lending in 2026, even if the number of transactions remains below peak levels.
This gradual recalibration suggests that the UK housing market is entering a phase of measured recovery, with buyers taking advantage of more palatable finance options while sellers test modest price increases. For investors, particularly those interested in residential and buy-to-let assets, this backdrop can offer opportunities to deploy capital where yields, financing and tenant demand intersect in a more stable way than in recent years.
