Mortgage rates in the UK are trending downward, with two-year fixed rate deals now approaching 3.5%, the lowest levels seen in several years.
Falling inflation and declining interest rates have created stability in the housing market, giving homeowners and buyers more confidence in their decisions.
Whether you are buying your first home or looking for a self-build mortgage or renovation mortgage, now is a time to pay attention to how rates are moving.
How mortgage rates are going down
At the start of 2026, major high street banks have reduced mortgage rates:
- Barclays offers a two-year fixed mortgage at 3.57% with an £899 product fee for buyers with a 40% deposit, and 3.78% for remortgagers with 25% equity (£999 fee).
- HSBC matches the 3.78% two-year fix for remortgagers, with a £1,008 fee.
- Halifax has reduced rates by up to 0.16 percentage points for homebuyers.
These reductions reflect active competition between lenders and a market environment favourable to borrowers.
What experts predict for 2026
Rachel Geddes, Strategic Lender Relationship Director at Mortgage Advice Bureau, highlights the market outlook: "The economy in 2025 ended up being tougher than many predicted. With inflation easing and interest rates declining, homeowners now have some breathing room. This stability makes a big difference when it comes to decision-making."
On what 2026 might hold for interest rates, Geddes says: "We expect interest rates to continue falling, with the Bank of England base rate possibly reaching 3.25%–3.5% during the year. Many historically low fixed-rate deals will expire in 2026, so now is a strong time for homeowners and buyers to seek mortgage advice."
Tim Foreman, Managing Director of Land and New Homes, explains the potential impact on the housing market: "In the last few years, only those who had to move were active. As borrowing costs ease, discretionary buyers will return, chains will lengthen, and stock will turn more quickly. Even a modest reduction in interest rates could create a noticeably stronger market in early 2026."
Supporting buyers and special markets
The fall in mortgage rates, combined with initiatives such as the Mortgage Guarantee Scheme, is providing added support for self-builders and home renovators, helping them access financing at competitive rates.
With rate cuts easing borrowing costs, concerns about mortgage rate rises have lessened, giving buyers more confidence to plan projects or move home.
Stabilising rates, alongside modest changes in house prices and clearer rules on stamp duty, are creating an environment where more people can afford to enter the housing market or upgrade their homes.
What the falling rates mean for buyers and the market
The decline in mortgage rates is creating opportunities for a wider range of buyers. Rachel Geddes points out that lower interest rates and easing inflation give homeowners more stability, making it easier to plan purchases or remortgages.
Tim Foreman notes that falling borrowing costs could encourage buyers who were previously waiting for better conditions to re-enter the market.
This return of discretionary buyers could strengthen property chains, reduce delays, and make the overall housing market feel less fragile. Even small reductions in interest rates early in 2026 could stimulate more activity, supporting a healthier property market.
Early signs indicate mortgage rates are going down in early 2026, with lenders actively competing to offer low fixed-rate deals.
The combination of historically low rates set to expire, falling interest rates, and improving market stability makes this a strong window for buyers and remortgagers to take advantage of competitive pricing and improved affordability.
