While challenges around affordability, taxation and regulation remain, forecasts from UK Finance, IMLA and leading housing commentators point towards modest growth, improving confidence and a more predictable environment for borrowers and advisers alike in 2026.
With the base rate being held at 3.75% and house price growth trending up, we can expect a more positive year ahead.
Lending Volumes
UK Finance forecasts that overall gross mortgage lending will rise by 4% in 2026 to £300bn. While this is not a return to the unpredictable activity seen during the pandemic years, it does signal a steady recovery following a quieter period. The Intermediary Mortgage Lenders Association (IMLA) is more optimistic, projecting gross lending of £320bn in 2026 and further growth to £350bn in 2027, up from an estimated £288bn in 2025.
This points to a market that is expanding gradually rather than surging, with volume growth driven less by house price inflation and more by refinancing activity, competition between lenders and improving affordability as rates ease.
Affordability Pressures Growth
Home purchase lending grew by 22% in 2025 to £176bn, partly driven by buyers bringing transactions forward ahead of the Stamp Duty changes in April. That spike is not expected to repeat. UK Finance forecasts purchase lending growth of just 2% in 2026, reaching £180bn, as affordability pressures continue to weigh on demand.
Mortgage payments remain high, relative to income, even as interest rates are expected to drift lower. Financial Times Adviser notes that households who delayed decisions ahead of the Autumn Budget may begin committing in 2026. First-time buyers (FTBs) are most likely to benefit from this environment. Moneyfacts data shows mortgage product availability at its highest level in 18 years, with lenders relaxing criteria and increasing support for FTBs.
Financial Support
Barclays’ latest Property Insights highlights a growing trend: financial support from family is no longer focused on FTBs. A fifth of ‘second-steppers’ received help from friends or family when buying their next home, with an average contribution of £81,000. Notably, half of those who received help had also been supported when purchasing a previous property. Longer-term financial planning, gifted deposits and family-assisted borrowing across generations are likely to continue to grow in client conversations.
Buy-to-Let Forecasts
UK Finance expects new buy-to-let (BTL) purchase lending to remain mostly unchanged in 2026, at around £11bn, following 11% growth in 2025. Higher taxes, tighter regulation and the impact of rental reform continue to restrict activity among smaller landlords.
IMLA, however, forecasting gross BTL lending to rise from £39bn, in 2025, to £44bn in 2026, increasing further in 2027. Savills expects a further wave of sales by smaller landlords, with properties being absorbed by FTBs or larger portfolio landlords who are more able to manage regulatory burdens.
The Renters’ Rights Act is likely to accelerate this trend, while the additional income tax rate on investment income is expected to influence rental price growth. Reduced supply could increase pressure in the private rental sector, potentially sustaining demand for BTL finance among professional landlords.
Refinancing Opportunity
Refinancing will remain one of the defining areas of the 2026 market. Around 1.8 million fixed-rate mortgages are due to expire, up from 1.6 million in 2025. External remortgaging is forecast to grow by 10% to £77bn, while product transfers are expected to rise by 2% to £261bn (UK Finance). Borrowers coming off ultra-low fixed rates will be navigating higher repayments, even if we see a modest fall in rates. Early engagement, proactive reviews and clear guidance will be critical in delivering value.
House Prices & Rates
Nationwide expects house price growth to remain in the 2–4% range in 2026. Changes to property taxes announced in the Autumn Budget are unlikely to disrupt the market, with measures like the high-value council tax surcharge delayed until 2028 and affecting a small proportion of homes.
On interest rates, the outlook is cautious optimism. Savills expects a further 50-basis-point reduction if geopolitical pressures ease, bringing rates closer to the 2% inflation target. While we’re unlikely to see a return to sub-2% mortgages, gradual rate reductions should support confidence and improve affordability over time.