UK Mortgage Market Update – 23 February 2026
The UK mortgage market continues to shift as inflation eases, interest rate expectations change, and house prices show signs of renewed momentum. Here’s what happened this week, and what it means if you’re buying, remortgaging, or reviewing your mortgage options.
Updated: 23 February 2026
Quick summary — this week in mortgages
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Base rate held at 3.75%, but rate cuts increasingly expected
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Mortgage rates remained broadly stable
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UK house prices moved above £300,000
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Inflation eased to around 3%
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Buyer activity continues to improve in London
Bank of England outlook: rate cuts increasingly expected
The Bank of England held the base rate at 3.75% earlier this month, but the vote was closely split, with several members pushing for a rate cut. Markets are now pricing in the possibility of a reduction later this spring as inflation and wage growth continue to cool. (bankofengland.co.uk)
What this means for borrowers:
- Fixed mortgage pricing has remained competitive
- Some lenders are starting to price in expected future cuts
- Tracker borrowers could benefit quickly if rates fall
Mortgage rates remain relatively stable
Average mortgage rates have remained broadly steady this week:
- Average 2-year fixed: ~4.26%
- Average 5-year fixed: ~4.40% (according to Rightmove‘s latest mortgage rate data.)
While rates are still higher than the ultra-low levels seen historically, they are significantly lower than recent peaks, improving affordability for many buyers.
Key takeaway:
Many borrowers are now comparing shorter fixes vs longer fixes as expectations for future rate cuts grow.
UK house prices hit a major milestone
Halifax reported that the average UK house price has moved above £300,000 for the first time, showing a resilient market despite affordability challenges. (The Guardian)
Current market trends:
- Modest annual growth (around 1%)
- Stronger activity levels compared with late 2025
- Continued pressure in higher-priced areas like London
For buyers, this means competition remains strong in desirable areas, especially for well-priced homes.
Inflation falls. Positive news for mortgages
UK inflation dropped to around 3% in January, easing from previous months. (The Times)
Lower inflation generally supports:
- Future interest rate reductions
- Improved lender confidence
- More stable mortgage pricing
This is one of the key reasons many analysts expect the next phase of the mortgage cycle to become more borrower-friendly.
What we’re seeing from clients this week
Not sure where you fit? We can usually tell you quickly whether now is a good time to review your options.
Across London and the South East, we’re seeing:
- Buyers returning after waiting during higher-rate periods
- More remortgage enquiries from borrowers coming off older low fixes
- Increased questions around whether to fix for 2 or 5 years
One thing is clear: lender affordability models still vary massively, which means borrowing results can differ significantly depending on lender choice.
Many buyers are reviewing affordability (see our mortgage salary guides).
This week’s lender trend
This week we’ve seen some lenders adjusting pricing slightly as markets anticipate future base rate cuts. While headline rates haven’t moved dramatically, affordability outcomes are starting to vary more between lenders, especially for higher borrowing amounts and London buyers.
The key takeaway: two lenders can give very different results for the same applicant right now, which makes lender matching especially important.
Oportfolio insight: what this means right now
As a London-based whole-of-market mortgage broker, we regularly compare affordability across high-street and specialist lenders.
If you’re planning to buy or remortgage in 2026:
- Waiting for rates to “drop dramatically” is rarely the best strategy
- Many lenders already price expected cuts into fixed rates
- Choosing the right lender matters more than timing the market perfectly
The biggest difference we see between successful borrowers and frustrated ones is getting lender matching right from the start.
Need clarity on what this means for you?
Every borrower’s affordability is different, especially in London where property values and loan sizes are higher.
If you want to understand:
✔ What you could borrow right now
✔ Whether rates are likely to help your situation
✔ Which lenders are currently most competitive for your profile
Frequently asked questions
Will mortgage rates fall in 2026?
Many analysts expect gradual reductions, but lender pricing already reflects expectations.
Is now a good time to remortgage?
It depends on your current rate and lender options.
