Findings suggest that easing borrowing costs may largely offset small increases in property values, keeping monthly repayments broadly stable across buyer groups

Falling mortgage rates in 2026 could allow for modest house price growth without materially improving or worsening affordability for first-time buyers and homemovers, analysis from Moneyfactscompare.co.uk revealed.

Based on consumer behaviour on Moneyfactscompare.co.uk during 2025 and average mortgage rate data, the findings suggest that easing borrowing costs may largely offset small increases in property values, keeping monthly repayments broadly stable across buyer groups.

Among first-time buyers, the typical mortgage loan stood at around £236,000 against an average property value of £310,000, equating to a loan-to-value (LTV) ratio of 78% and an average deposit of 22%.

Homemovers borrowed slightly more, with typical loans of £251,000 on properties worth approximately £466,000, reflecting an average LTV of 58% and equity of nearly 42%.

Remortgage customers borrowed less, averaging £215,000 against property values of roughly £460,000, resulting in an average LTV of 50%.

Markets currently expect the Bank of England to lower the Base Rate from 3.75% to between 3.25% and 3.5% during 2026.

Adam French, head of news at Moneyfactscompare.co.uk, said: After more than three years of higher borrowing costs, even small cuts in mortgage rates can have a meaningful effect on buyer behaviour.

With markets expecting at least one further 0.25 percentage point cut to the Base Rate, the mortgage landscape in 2026 may be more forgiving than at any point since 2021, he said.

Our modelling suggests that easing rates may make modest house price growth possible without stretching affordability further, an important shift after the intense affordability squeeze of 2022–2025, he said.

He added: First-time buyers still face the steepest challenges, with many stretching to higher LTV deals given the need to save a considerable deposit. In contrast remortgage borrowers – who typically hold far more equity and are unlikely to need to borrow more – stand to benefit most from easing rates.