Jade Pinkerton is a senior mortgage adviser at Oportfolio Mortgages in London
As we move into 2026, the UK mortgage market feels cautiously optimistic, but far from straightforward. After attending PRIMIS’s 2026 kick-off event, it’s clear that while demand for mortgages remains resilient, wider economic uncertainty continues to shape how lenders, regulators and borrowers behave.
From interest rates and inflation to first-time buyer support and FCA priorities, there are a lot of moving parts. Here’s my take on where the market stands as we head into the year ahead.
The Economy in 2026: What the Data Is Telling Us
Insights from Santander’s economist, Giles Andrews, painted a mixed picture of the UK economy.
Growth throughout 2025 was weak overall, with a stronger first half followed by a noticeably softer second half. External pressures, including the ongoing impact of global trade tensions and tariffs, continue to weigh on confidence.
Looking ahead to 2026, household spending remains a key concern. While consumer spending accounts for roughly two-thirds of UK GDP, many households are choosing to save rather than spend. Any uplift seen late last year was largely seasonal and driven by travel and Christmas, rather than a lasting trend.
There are also clear warning signs in the labour market!
Unemployment has risen to around 5%, its highest level since the pandemic, payroll numbers are declining, particularly among younger workers, and lower earners and those in hospitality. Wage growth has also slowed, reducing affordability for many households.
All of this feeds directly into the Bank of England’s thinking on interest rates and monetary policy.
Interest Rates, Inflation and the Bank of England
One of the strongest takeaways from the event was just how uncertain the outlook for base rate movements remains. The Bank of England’s Monetary Policy Committee is currently split, with votes consistently close. Some members believe rate cuts are necessary to stimulate the economy, while others are concerned about inflationary pressures.
Oliver Whitehead is managing director of Oportfolio Mortgages
Inflation remains a major factor. Oportfolio’s Managing Director, Oliver Whitehead also agrees, saying:
“The market wants lower rates, but with inflation rising to 3.4% this month, that may limit how far the Bank of England can go when they meet.”
Some economists are predicting no further base rate cuts at all, while others still expect reductions of up to 1% over time. The reality is that no one is certain, and that uncertainty continues to shape mortgage pricing.
Mortgage Market Momentum
Despite economic headwinds, mortgage activity has remained strong throughout 2025, and that momentum has carried into early 2026.
At Oportfolio Mortgages, January has already been exceptionally busy. This isn’t isolated to us either; lenders across the UK are seeing sustained demand.
Several encouraging trends stand out currently.
- Banks want to lend and are competing more aggressively
- Mortgage rates are gradually reducing
- Affordability models are becoming more flexible
- High loan-to-income lending and specialist criteria are expanding
Demand has proven resilient, which is a positive signal for the wider housing market. As Oliver puts it:
“It’s certainly a busier market and a welcome start to 2026. Banks are more open to lend, the FCA is trying to help first-time buyers, and mortgage rates are coming down, there’s a lot in the mix to reignite the housing market.”
FCA Priorities: What This Means for Borrowers
The Financial Conduct Authority’s focus areas are also shifting in ways that could materially benefit borrowers over the coming years.
Key priorities include:
- Expanding access to mortgages for first-time buyers
- Enhanced later-life lending, making borrowing more accessible for older customers
- Greater use of AI to speed up assessment and decision-making
- Stronger protections for vulnerable customers, including those consolidating debt
Crucially, while technology will play a bigger role, the FCA remains clear that there must still be a human element to advice, particularly where vulnerability or complex circumstances are involved.
Protection and Financial Resilience Matter More Than Ever
One consistent message from PRIMIS was the growing importance of protection alongside mortgage advice.
With economic uncertainty, fluctuating employment conditions and affordability pressures, ensuring clients are financially resilient is no longer optional. Income protection, life cover and critical illness insurance all play a vital role in safeguarding homeowners against the unexpected.
Good mortgage advice in 2026 isn’t just about securing a competitive rate, it’s about building a sustainable, long-term plan.
Cautious Optimism for 2026
The UK mortgage market enters 2026 in a far stronger position than many expected a year ago. Demand is there, lenders are open for business, and regulators are actively looking for ways to improve access to homeownership. That said, inflation, interest rates and economic confidence remain finely balanced. For borrowers, navigating this landscape without expert advice could be costly.
At Oportfolio Mortgages, our role is to cut through the noise, interpret what’s really happening behind the headlines, and help clients make informed, confident decisions, whatever the market brings next.
