A rare combination of easing property prices, forecast interest rate reductions and more relaxed lending criteria could make 2026 one of the most favourable years to purchase a home since the pandemic, according to a leading mortgage specialist.
Recent market data shows UK house prices have continued their year-on-year decline, with December recording another monthly fall. After a prolonged period of inflation and elevated borrowing costs, this trend is creating new opportunities for buyers who previously postponed their plans to enter the market or trade up.
At the same time, economists are anticipating meaningful interest rate cuts in 2026. Capital Economics predicts the Bank of England base rate will fall from 3.75% to 3% over the course of the year. This outlook is shared by global banks Morgan Stanley and HSBC, both of which expect the rate to reach 3% by the end of 2026.
John Everest, Director at independent mortgage advisors Everest Mortgage Services said: “Falling house prices combined with lower interest rates is a powerful mix to create a buyer’s market. If forecasts are correct, many people could be borrowing at cheaper rates while purchasing homes at more realistic prices than we’ve seen in recent years.”
In addition to rate expectations, mortgage affordability has improved significantly. Following calls from the government to support first-time buyers and homeowners, lenders have increased income multiples over the second half of 2025. Between August and December 2025, typical lending rose from around 4.5–5 times income to much higher levels.
Today, many lenders are offering 5–5.5 times income to standard buyers and up to 6.5 times income for first-time buyers quite widely, with one lender now offering up to 7 times income for first-time buyers.
“The offers lenders are now willing to give has created a huge shift in affordability,” John Everest added. “While we don’t expect interest rates to fall to the levels seen during the pandemic, buyers who may have struggled to borrow enough even a year ago may now find the doors wide open.”
John claims the mortgage market itself has cooled compared to 12–18 months ago, increasing competition among lenders. With fewer buyers and strong pressure to lend, banks are engaging in aggressive pricing and product innovation to win business.
This competition has already led to the return of 100% loan-to-value mortgages in 2025, alongside products requiring deposits of less than 5%, which John says is a significant development for renters and first-time buyers trying to get onto the property ladder who don’t have high lump sums saved for typical 5-10% deposits.
These changes are not limited to salaried workers. Self-employed individuals and company directors are also benefiting from improved lending criteria, with more flexible income assessments and higher borrowing multiples now available.
John concludes that while it is impossible to time the market perfectly, 2026 is shaping up to be a rare year where pricing, borrowing costs and lender flexibility all align.
“For anyone considering buying their first home, upsizing, or refinancing, 2026 could represent one of the best opportunities we’ve seen in years. However, getting advice from the right people early will be key to making the most of it.”
For more information about Everest Mortgage Services, visit www.everest-mortgages.co.uk.
