The cut in borrowing costs from major lenders comes as financial information service Moneyfacts said expectations are high for a booming market in 2026

NatWest, Barclays, Nationwide and Halifax have all cut mortgage rates this week, fuelling expectations of a “booming market” in 2026.

The average rate for a two-year fixed mortgage remained at 4.48% this week, according to data from Uswitch. The average five-year fixed deal came in at 5%, a drop from the previous 5.04%. Those are the average rates across all lenders for a 75% loan-to-value (LTV) mortgage, meaning buyers need to have at least 25% of the purchase price as a down payment.

The Bank of England cut interest rates to 3.75% from 4% last month, taking borrowing costs to their lowest level in nearly three years.

The cut in borrowing costs from major lenders comes as financial information service Moneyfacts said expectations are high for a booming market in 2026.

Data from the group showed the number of mortgage products on offer has jumped to its highest level in 18 years, while looser lending requirements are providing greater support for people buying their first home.

Mortgage rates have dropped over the past year, although wider global and economic uncertainty still threatens to slow or reverse further improvements. Some borrowers also continue to face higher costs when their existing deals come to an end. More than eight in 10 mortgage customers are on fixed-rate deals.

Under these arrangements, the interest rate remains unchanged until the deal expires, typically after two or five years, when a new product is selected.

In August last year, the average two-year fixed mortgage rate dropped below 5% for the first time since the mini budget announced by former prime minister Liz Truss in September 2022.

Rates have dropped further since then, with some additional movement in recent days, and Moneyfacts has forecast more falls early this year.

Expectations are high for a booming market in 2026. Mortgage rates are lower year on year, and the choice of deals is abundant, said Rachel Springall, finance expert at Moneyfacts. First-time buyers are not being left behind by this progress, she added.