Mortgage Predictions for 2026

0:00If you already own a property or two and it felt like a lot more work than it should have been, then you are not alone. We've seen a lot of portfolios over the years and what we've noticed is what separates the ones that work from the ones that don't isn't the amount of effort that someone puts in. It's the core approach that they take. The people who end up doing best in property have just got a few things right from the start and they've stuck with them. We've written all of this up into a free guide. It's basically our complete investment philosophy, and you can grab it for free at propertyhub.net slash strategy.

0:31That's propertyhub.net slash strategy. Hey everyone, it's Robby here with Rob D, and you are listening to the Property Podcast. We make predictions each and every year, but this week we've roped in two experienced mortgage brokers and put them on the microphone to tell us what is going to happen with the mortgage market in 2026.

1:00Welcome to the Property Podcast. Thank you for joining us. In case you don't know, we buy more than£100 million worth of property every year for our clients. You can find out more about that at propertyhub.net slash invest. And understandably, what all our clients want to know, and I'm sure you want to know as well, is what is going to happen with mortgages this year? Is it a good time to refinance? If I'm looking at a purchase, what rate could I end up paying? What kind of options are there going to be available am i going to get killed on fees well we've got two expert answers to all of those questions coming right up it's time for our new story of the week now and it's not just been our good selves who've been predicting where the best places are to invest in the uk this year supla has also been at it and this is a piece in money week and they have reported rob the top 10 places where they believe they'll see house growth this year in the UK.

1:48And I'll cut straight to it. It's a very different list to ours. Yeah, I don't know if they've got a really sophisticated algorithm and this is absolutely rock solid data, or if they just delegated this task to a really proud Scotsman. But nine of the 10 areas are in Scotland. So shout out to Wigan, which is the only non-Scottish town to make it into the list of highest price growth. Motherwell topping the list, Glasgow in second, and then it's of Scotland all the way down until you get to Wigan but Rob they have recognised this and they've also produced a list of England only and that list far more closely echoes ours so you've got Newcastle in there you've got Wolverhampton as part of the Birmingham Ripple and then the greater Manchester theme Manchester Oldham Wigan so maybe not that different after all once you get beyond that pretty one-sided top 10.

2:36It appears from looking at it a little bit Rob that what they've done is they've based it heavily on affordability and that's absolutely one of the things that we take into consideration when we look at an area to invest in. But something that we think is important to add to that is fundamentals. So you may have a really strong area in terms of affordability, but does it have the fundamentals? And one in the list in the top 10 in England is Carlisle. Now that is an example of a place that probably wouldn't make our list in the near future, because while it is very affordable, the fundamentals, for me at least, just aren't there.

3:11and I'm sorry if you're from Carlisle, I'm sure it's a beautiful place, but there are other areas within the UK that have better transport links, that have stronger employment prospects and all the other things that we look for when we weigh up an area and how strong it is from a fundamentals point of view. So we'll link to this in the show notes so you can have a look at the full list. While I'm pleased to see some of our list is matched in their list, I'm quite comfortable with it being different for the way they've assessed it. But you have a look at their list. You hopefully have listened to our episode where we've picked our top hotspots and you can decide for yourself who's going to get it right this year.

3:45We, of course, will review our answers as we do each and every year at the end of the year. So we always have that to look forward to. Well, looking at the year ahead, obviously, everyone wants to know what's going to happen with house prices, but everyone also wants to know what's going to happen with mortgages. Where are mortgage rates going to end up? Is it going to become easier to pass the stress tests? Are there going to be new products coming to the market? And is there any prospect of fees becoming less painful? Well, rather than making our own predictions, we are calling in the experts.

4:12We spoke to two mortgage brokers who we had on the show before, Kelly Rule from Serious Property Finance and Nick Shepard from Framework Mortgaging. We asked them both for their predictions. So we're going to listen to those now and we'll chip in and give our reactions as we go. So we weren't messing around. The first question we asked them was the big one. What is the average buy-to-let mortgage rate now? And what could it be by the end of the year? So when providing market feedback, I always refer to five-year fixed rates and the 3 % product fees and those products are started about 4.5 to 4.6 percent so the first step into the specialist world is incredibly competitive at the moment so four and a half percent with a three percent fee in terms of where I think the rates will be at the end of the year I'm hoping all in rates will begin with a four so we're shaving off maybe you know 0.4 0.5 percent so if we see interest rates touching 4 % with a 3 % fee, I think we'll be in a fantastic place.

5:10Again, they are five-year products. Two years, obviously, they are a lot lower, but it's more of an investment question. Is a two-year viable with the cost of refinancing and the valuation risk? Okay, that's interesting. So Nick's predicting around the mid-fours. Before we racked Rob, let's listen to what Kelly had to say. So the average buy-to-let rate all depends on whether you're opting for a fee product or a non-fee product. So typically the most competitive rates at the moment are your no-fee products and they are averaging for a five-year fix for a limited company buy-to-let at around about 5 % with no fee whatsoever.

5:52Or if you're looking to add in a fee product because maybe you want the rate to be a little bit lower because you're possibly investing for cash flow purposes, as opposed to your longer term capital growth, then we're looking at fee products around about 4.3 % with a 3 % fee. I've always said I think we would stabilise around about 4%. But if I was to hazard a guess towards the end of the year, I think that we're going to be seeing rates around about 3.5%. I think base rate and I would like to think that the fixed rates will not be too dissimilar of that. Possibly they'll stabilise around about 4.5 is my guesstimate on things.

6:34Okay, so we have agreement. Kelly also thinking that we're going to end up around about 4.5 % by the end of the year. We'd take that, wouldn't you, Rob? As we've said recently, the numbers even based on today's mortgage rates are looking far better than most people probably believe. So if we do get rates coming down about another half percent, that wouldn't be bad at all. You're right, Rob. It wouldn't be bad at all. I'm a little greedy. I was really hoping that one of them was going to be brave and say we'll see a sub four but I completely understand them wanting to be correct and giving a sensible answer and mid fours is probably about where it'll be.

7:07And what makes this really interesting for me is not that borrowing costs are slightly less but it's that borrowing costs are decreasing while yields are increasing because rents are going up and property prices aren't really going anywhere. we covered this on a live event that we did a few weeks ago but this is something that we probably will come back and talk about again in the future because there's a crazy opportunity in property right now we've talked about it in different ways and we'll absolutely talk about it again because we just want people to be alert to what is happening out there but with interest rates coming down it will just make the market even more attractive for investors and of course rates will come down for normal residential mortgages as well which may encourage more people to the market So good news.

7:50So next we asked about fees and that may sound like an odd thing if you're not used to buy-to-let mortgages but fees play a very big part of a buy-to-let mortgage and over the last few years they seem to be bigger than ever. I remember when I first started in property and property investment and the fees were nowhere near what they are now and it seems that lenders use fees as a way to give a more attractive rate. So because of that we absolutely had to ask them their opinion on what they think will happen with fees and will they come down? Prior to the rates going through the roof, which was early 2022, your average buy-to-let limited company fee was 1.5 % in some instances too.

8:34Would I ever have imagined I'll be talking about products that have a 5 % or sometimes even a 9.99 % fee? No, not in my wildest dreams, but that has now become the new norm. Those particular higher fee products are more suitable for your lower yielding properties. So you're probably looking at those mainly London-based, South-based, where the yields are lower. Those higher fee products really come into their own. I'd like to think as we continue through this journey and rates do continue to come down, the fee element would kind of go back to where we were. However, one good thing that's come out of it is this no fee option, which for me has become a great new norm.

9:16Fantastic. You're paying a little bit more, but you're actually saving in the long run. So now the investors have a little bit more choice, whereas we didn't have that before. So I'd like to think that bit would stay, but it'll be nice if we start to see the 5 % plus fee options being a thing of the past. Okay. So Kelly makes a point that some of those truly horrible fees are already a thing of the past and she believes slash hopes that by the end of the year we won't be talking about five percent fees or more let's see what nick thinks again the arrangement fees have got a bit of a bad reputation and they do take a lot of headlines but they are a really useful tool and i don't think it's necessarily something to be scared of you know it allows us to push interest rates down as much as possible which is why lenders offer that because they realize these all-ins are not fantastic for vanilla bite alert so for example if you've got failing stress tests or if you've got a reason to preserve your cash flow push your interest rate down as low as you can take the fee and preserve your monthly payment obviously if your focus is overall costs you have the lowest fee possible and then there are pros and cons for both routes but what's really important is that the advice is talked through with the client and the advisor shows their recommendation pack we have a master sheet for example where we talk through all of these uh examples so that the large fee might not be a bad idea in some instances i think it's really interesting that nick is gone in defense of fees but actually his rationale is pretty sound because if you can offer a lower rate because you've got a fee there then it allows the stress tests to be more generous so in simple terms for those who don't understand what a stress test is when you get a buy to let mortgage the lender will stress test your rent against the mortgage payments.

11:03Now this really isn't an issue for properties in the Midlands and the North but if you invest in the South East it really is a big thing. So Nick makes an interesting point that doesn't necessarily need to be seen as a bad thing. I really do think it will depend on whether it's a fixed fee, a percentage fee, the value of the property that you go for. This is where a good broker can take you through all that. I think what we can take from it is fees are here to stay but they have a use, they have a purpose in certain situations. Yeah, well, the happy situation that hopefully we're ending up in is that we will have choice.

11:34So what you don't want is your only option being high fees and a high mortgage rate. If you've got the choice of higher fees, or you've got the choice of no fees, as Kelly highlighted, and everything in between, they can really play off the two against each other and find the right product for your situation, which is a good place to be. Now in the world of lending, you've got lots of different players, you've got high street banks, you've got building societies, and you've got more specialist lenders. We asked Nick and Kelly, which of those segments was likely to be more competitive and producing the best deals this year?

12:01High street banks will always be competitive. They operate with less margin and they're focused on volume of business. So high street banks, especially if they operate within their own entity in specialist, will always be driving the market downwards. And that's what we've seen with some high street banks operating in the specialist world. So this is why the rates are dropping. So high street banks will always be competitive. Building societies, not so much. They're always going to operate with a healthy margin. Their criteria is tighter, as you'd expect from a building society. So I don't think you can see rates drop off a cliff there.

12:36Specialist lenders is an interesting one. You know, rates are going to be driven down by competition, circling back to high street banks. So I think high street banks and specialist lenders will remain competitive this year. All of these lenders have their own specialisms. So your high street banks are great, but they typically deal with very vanilla buy-to-let. So as an example, I'm just going to throw Nationwide out there. So Nationwide probably have been continuously the main residential go-to mortgage lender for your main residential home of recent years. They're great for buy-to-let. They actually have a sister company called The Mortgage Works.

13:18So The Mortgage Works are part of Nationwide, but they do all of the buy-to-let lending. So they actually have really worked on not only their pricing to make sure they are one of the leading buy-to-let lenders for price, both personal name and limited company. They're continuously in the top three. They've also really sharpened their pencil with regards to criteria. So typically we would go to your challenger banks, which is your more specialist lenders for, I mean, I'm going back 10 years now, limited company used to be really specialist buy-to-let. There never used to be any high street bank or building society that would entertain a limited company buy-to-let.

13:58That's now a thing of the past. And high street banks have been entertaining that for a couple of years now. And there's more of them going into that realm. So I would like to say in that instance, the high street banks are definitely becoming more competitive. I think, Rob, again, the word that jumps out at me here is choice. So Kelly talks about how high street banks are becoming more competitive in that they used to have no interest at all in limited company mortgages but now increasingly they do even though they've had to get used to the fact it's more complex it's more paperwork but because it has become so popular among investors i suppose that's forced their hand but again that's good news because more options more options is always welcome rob because more options equals more competition and more competition means better rates and better products for all of us but a big part of having better products for all of us is the stress test, something we touched on earlier.

14:47So we asked them, what will happen with stress testing and affordability criteria? Are there any signs that the rules may ease or be tweaked at all? Stress testing has always really been the same on a five-year fixed deal, where you don't have to worry about this too much yourselves because your mortgage broker will work this out for you. But typically the rule of thumb is on a five-year fixed, The stress test is all based on the pay rate that you're going to secure on the product you selected. On a two-year fixed, they add an additional stress test on top of that. And the reason for that is because they feel that there's a risk when you come off of your two-year fixed that your rate could be a lot higher, like what we've just gone through over the last couple of years.

15:30So they want to make sure that you're generating enough rent to cover an increase if there was one when you had to refinance after two years. Now, typically of late, that stress test has been the pay rate you're going to pay on the two year fixed plus 2 % on top of that. And then your max borrowing would be whatever you could get that to from the rental, which typically is 125 % cover for a limited company buy to let. Or if you're a basic rate taxpayer buying in personal names, or if you're a higher rate taxpayer buying in personal names. And typically the cover is about 140, 145 % of your mortgage payments.

16:05What is really great to see and really exciting over the last six months, we're now seeing two-year fixes, stress tests, reducing from that nominal plus 2 % back down to a nominal 5.5. And that is typically what it was pre-2022 before the rates went through the roof, which means more deals on a two-year fix are going to stack at max borrowing, which again is just giving investors more choice. Well, good news once again. It seems like the truly horrible era of stress testing may be coming to an end. Lots of people, me included, like five-year fixes, but lots of people also have been pushed towards five-year fixes because the stress testing is easier on five-year plus deals.

16:49Now it seems like we're going to have the option again, two and three-year fixes, back on the table. But Nick doesn't believe that we should all rush back into shorter fixes. In terms of affordability, I've always preferred five-year fixes and majority of my clients take five-year fixes. So stress testing and affordability hasn't really been an issue over the last couple of years because they've always passed the stress tests. But where it has been a problem is with two-year fixes, but that's not so much of a problem anymore. So two-year fixes do typically work with 75 % borrowing. But what the bigger question is really, is a two-year fix appropriate?

17:25You know, if you are mortgaging away in two years' time, you've got a rate risk, you've got a valuation risk and most importantly you've got a cost risk it's going to cost you to transact that mortgage in two years which could be costly you've got to pay solicitors valuers brokers potentially again only if you mortgage away from your current lender so it could be a costly process and remortgaging two years is in a specialist world is something i wouldn't recommend nick again also talking about how a lot of his clients are going into five-year fixes and i think that's a lot of credit to both of these brokers.

18:00It could be suggested that a broker would want you to take a two-year product every single time because they're going to be working with you more frequently. But both have said that they've guided clients to five-year fixes on a frequent basis because the stress tests are a lot easier. And of course, you haven't got fees and got all the hassle that you have every two years. I'm a bit of a mixed bag. I sometimes will go for a five, I sometimes times will go for a two and Nick and Kelly will absolutely be putting clients into two and five but I think credit to them both that they see the benefit of five-year fixes for a lot of their clients.

18:36So next we wanted them to think a little bit creatively think to the future of what is possible and we asked do you expect to see any more creative products emerge like longer-term fixes, tracker hybrids, green mortgages. So what did they say? We've seen the nominal green products which have become very popular, whereby if you've got an EPC rating between A to C grading, then you can qualify for a slightly cheaper product, which is fantastic. And typically, that's about 0.1, 0.2 % cheaper than what you would get if you were over C. That's really good to know. Another product that I really liked recently is a product where if you are looking to incorporate a property into a limited company, I have a product option that can allow you to do that without coming off of your fixed rate.

19:32Talking of portfolio landlords as well, we've got lenders now who are a lot more open to looking at your whole portfolio. So you may have properties here, there and everywhere with lots of different lenders, all different expiries, etc. And we've now got lender who has a multi-loan product which is actually cheaper than their new customer product so if we're putting with them three or more properties in one go you get to have the lower rate and they're actually really competitive anyway so you're getting a really good saving there so i really like that one it's a really nice niche options there so being able to incorporate without losing your fixed rate being able to put your whole portfolio potentially onto one product those aren't things that many people are going to want to do and it sounds like it's just one lender pioneering each of those at the moment.

20:18But as we've seen with limited companies, if something becomes popular and there's lots of demand, then competition among lenders means that others are highly likely to follow. Okay, so let's have a listen to what Nick had to say. In terms of creative products, I'm not expecting to see many creative products, and it's not something I really have a focus on. I think we'd all agree that ByteDate should be as vanilla, as boring as possible, really. So just to see some really good, cheap five and two-year fixes would be great again sonia swaps are about 3.5 3.6 you know inflation is not too dissimilar so if we see inflation come down we're going to see all-in rates come down and then we should see those all-in rates beginning with a four before it ended the end of the year and that would be a good sign of progress well nick's played it safe here hasn't he he wants the market to do what it does well keep doing it and bring those rates down it's hard to argue with that really i think sometimes it's nice to have the shiny things going on in a distance and on the side and oh should I take advantage of that but actually for 99 % of us what we want is a good vanilla product getting better rather than something fancy on the side so it's hard to argue with his desires to see more of that in the future.

21:30So for our final question we wanted to test our brokers and not give them a simple predictions question because we can and it's more entertaining. So the question we decided to ask them is what's the biggest mortgage myth consumers still believe in 2026? So let's have a listen to Kelly first and see what she said. And one that I get asked a lot again is about the base rate. I'm coming off my two-year fixed. Base rate has gone down so why are you quoting me a rate that's higher than what I had originally? And the answer to that is purely the fact that yes, base rate has come down, but they're not actually directly linked to the fixed rates.

22:13Your fixed rates are linked to inflation typically. So what we did see during 2025 is a temporary rise in inflation. So even though base rate was coming down, inflation went up, which meant that the fixed rates had a bit of a spike during the course of the year. And that was mainly because of energy and food prices. That's what tends to have a direct link. So yes, great news that the base rate came down, but that doesn't always necessarily mean fixed rates are coming down. So that's probably the first myth. Second myth, I quite often get asked, I'm thinking of investing in property, but I haven't found a property yet.

22:46Please, can you let me know how much I can borrow based on my income? Because that's drilled into us. Of course it is. Because when you're buying a main residential home, it is all based on your income. The property is secondary. So your income multiples will define how much you can borrow and a lender will issue you an agreement in principle on that basis. Very different in buy to let world. So here's my myth buster. Your income is secondary in this world. The rent that the property generates is the most important factor. So if you haven't got a property in mind, everything we talk about is very hypothetical.

23:23So an agreement in principle is actually fairly useless because we need an agreement in principle once we know that the property is going to meet the criteria. Once we know that the rent is going to meet the affordability criteria. So actually, the main importance is getting evaluation done to make sure the property meets all the criteria and getting your mortgage offer out. Yes, both of those we've spoken about multiple times. I can only imagine how sick she is of talking about these things, given that she has countless of these conversations every day. So I hope we can do our bit by airing those on the show to dispel those myths.

23:58Now let's hear what Nick would like to eradicate from investors' minds. And then the biggest mortgage myth is that lending and lending should move quicker. I think the most important thing for us all to focus on is to be proactive as we possibly can be. Yes, lenders can be slow and that process can be frustrating, but how we collectively make it better is by accurate fact finding and accurate documentation and having all your documentation ready and back at the start of the process. When things start to drag is when documents come back in dribs and drabs via the client or the broker hasn't correctly requested the right documentation and there's where you hit the lender queues and that's when it takes a long time.

24:41I always do say to clients if your application goes in quickly be concerned it should be a slower start to collate and advise and fact find. A slower start makes a quicker application process So if your application goes in quickly with not a lot of documentation or not a lot of questions, then please do expect a longer process. I think I'm one of those investors, Rob. I want it to be quicker as well. I'm not up for long protracted paperwork admin journeys, but he makes a very, very good point that you start slow, you finish fast and you do all the proper paperwork upfront, which makes life easier for you, the lender and the broker.

25:22and then it should be a smoother journey. As the scouts used to say, be prepared. Okay, Rob, we've had all our answers in from Nick and Kelly. It's an interesting pod, this one, because they obviously just live and breathe mortgages day in, day out. It sounds like an obvious thing to say, but when you are in it as much as them, it's so good to take their experience and bring it to our wider audience. What were some of the things that really stood out for you? What have you taken from today? Well, I think in terms of predictions, And something that I think is a mini example of a broader theme that we've talked about is that things are already better than you might think if you haven't been paying attention for a year or two.

26:03So when in 2022, 23, with a spike in interest rates, we had a huge spike in fees. Fees got really nasty and stress tests got really, really hard. It was a very painful time to be getting a mortgage. And in reality, unlike us, most people aren't paying attention to property all the time. So you might think it's still that way. But I think what came through in terms of predictions is things have already got a lot better. And both brokers seem to believe that things are going to continue to get easier on all those fronts throughout 2026. Not dramatically. You're not going to be borrowing at two point something percent, but it is going to get better.

26:37So the first and probably most important point, Rob, that came through to me was I felt reassured after this conversation. I feel exactly the same, Rob. You don't want a wild year when it comes to finance. You may want a wild year when it comes to your football team or adventures you have in life or anything else like that. But when it comes to finance, all aspects of finance, you don't want excitement. You want something that you can work with, something that feels predictable, something that feels safe. And the direction of travel for the mortgage market this year is going in a good direction.

27:08And it's not always been like that. In the last five years, there's been years when the mortgage market has been a pain in the backside to work with. So to see things are moving in the right direction, it's going to be an easier market to work with. The rates are moving in a direction that everyone's going to be happy with. I can only take encouragement from this and hopefully you listening can too. So a huge thank you to Nick and Kelly for putting their necks on the line. You know, we do it every year, but we're podcasters. We've done this for a long time. This is something that we're used to.