One month into the new year, and the general anecdotal evidence flowing through the market is that activity levels have pushed on, and that all signs are pointing to a year which improves on what 2025 eventually delivered.
On that very point, one would hope a number of lessons have been learnt, particularly by those in the government about the damaging impact gossip, hype and speculation can have on the housing market, and borrowers level of engagement in it. No-one needs a three-month period this year like we had in the lead up to the November Budget last year.
Certainty breeds activity, of that there can be no doubt. For first-time buyers, despite some speculation that 2026 might bring with it two, or possibly three, more Bank Base Rate (BBR) cuts during the year, one suspects much of this has already been baked into actual mortgage product rates.
Can we truly expect, for example, mortgage product rates - particularly at higher LTV levels – to drop by 50 or 75 basis points through the year, if the MPC does decide to cut BBR? I suspect not. Especially when swap rates have been actually rising recently.
In that sense, unlike in that pre-Budget period last year, there appears to be little reason for first-time buyers to wait, if they are in position to act now. Rates are unlikely to drop by a significant amount, house prices are likely to stay pretty stable, and affordability is not going to change radically. At least not yet.
This might change, with the FCA looking at the ways and means by which it can help more first-timers onto the ladder, but given a large number of lenders have already pushed their affordability criteria to offer bigger loans to first-timers, and we are unsure what will come out of this regulatory work, again it feels like the current circumstances are as good at it will get.
The other good news is advisers should be able to offer more potential new buyers access to mortgages and loan sizes that were simply not feasible, even a year ago. And when it comes to smaller deposits, we do have a stable marketplace.
Each month I look at product numbers and rates, and at the start of February, we have pretty much no change at all from January. Based on the Nationwide’s monthly average house price of £270,873 – an annual increase of 1% – we effectively have a static market.
For those wanting to buy an average-priced home with a 5% deposit, they would require just over £13,500, and as of today, would have 263 95% LTV products to choose from, down just one from the start of the year. That dip is the loss of one tracker/discount/variable product, down to 19 from 20, with there still being 244 fixes available.
As you might have imagined, with little change on product numbers, we have had little change on rates. I am writing this in advance of the next Bank of England MPC meeting, but if I were a betting man, I would certainly not be anticipating any further rate cut from the Committee this month. The recent increase in inflation has put paid to that.
Which leaves us in a very similar position to last month. For two-year fixed-rates, Lloyds remains top again with a 4.45% rate, although still only available to current account customers. Skipton Building Society has nipped in with a 4.52% deal, Progressive’s Northern Ireland-only deal has dipped from 4.55% to 4.53% and The West Bromwich Building Society enters the top four with its 4.54% deal.
Clydesdale Bank is a new name at the top of the best buys for five-year fixes, with a 4.53% mortgage, while Lloyds now has a 4.61% deal – down from 4.64% last month – and the Progressive still has its 4.62% deal, while the Skipton offer a 4.66%.
Mutuals continue to dominate the 95% LTV trackers, discounts or variable product space, with two-year discounts at the top of the best buys. Progressive offers one at 4.74%, Scottish Building Society also at 4.74%, while the Furness and Hanley Economic both offer a 4.84% deal.
We have a very similar picture with 100% LTV mortgage availability, with just six lenders offering a total of 10 no-deposit mortgages between them. Lloyds remains at the top of the tree with its three-year fix at 4.44% - again only for current account holders – however Beverley Building Society has cut the rate on its three-year discount to 4.99% from 5.14%, and Skipton Building Society now makes up the top three with its 5.09% five-year fix.
What appeared, at one stage last year, to be a significant increase in the number of 100% LTV mortgages has effectively stalled since then, and with the exception of these 10 products, it would appear that first-time buyer borrowers are going to need a 5% deposit at least in order to make their way onto the housing ladder.
