The start of any new year brings the potential of what could be achieved, and if we are to believe some of the recent mortgage market forecasts for the year ahead, then 2026 should deliver a positive hue for both the purchase market in general, and first-time buyer activity specifically.
Indeed, for the last two years first-time buyers – and their ability to get on the ladder – has been something of a bright spot for the market, one which the government and the regulator appear to want to support even further.
Green shoots are visible
Looking ahead, there are a number of green shoots to be plucked it would seem. Rates have undoubtedly dipped over the last 12 months, with the anticipation of a couple more Bank Base Rate (BBR) cuts during 2026 and therefore an ongoing easing of affordability that, coupled with slightly higher wages, should allow more first-timers to get into homes.
It’s clear the FCA has been asked to look at its own mortgage rules to see if they might be holding back greater activity levels and/or stopping some would-be homeowners from making it to that first rung. And while last year’s Budget had little in the way to cheer first-time buyers, the overall market environment – as highlighted above – does appear to be moving more in their favour, albeit without a notable tax carrot in the form of lower stamp duty costs.
My own view is the pent-up demand generated by the pre-Budget hype and gossip, will slowly but surely start to come to market, and looking at house price levels and product choice, it is possible to see a route to purchase for more would-be first-time buyers in this current market.
While three clear aspects – lower rates, changes to mortgage rules and ongoing pressure in the rental market – should allow more individuals to buy for the first time in 2026/27, we should be mindful that housing supply still remains weak, and rises in wages are not spectacular by any means.
However, my view is that we might expect first-time buyer activity to continue to increase. Certainly, both IMLA and UK Finance have forecast increases in purchase lending and we have to believe that much of this will be first-time buyer-related.
Slight movement in high LTV product numbers
It is the very start of the new year, and we might anticipate the market will take a little while to get into full flow, although the early indications are that we have already seen some movement, specifically in terms of high LTV product numbers, and less so, on rates.
Each month I look at product numbers and rates, and at the start of January, we can sense a little growth. Based on the Nationwide’s monthly average house price of £271,068 – only a 0.6% increase on this time last year – we are looking at increased product choice for those who can put down a 5% deposit, which would be just over £13,553.
We’ve seen a month-on-month increase with 95% LTV product numbers up from 254 in December to 264 at the start of 2026. The split is 244 fixes and 20 trackers/discounts/variables; for those with no deposit to put down, product numbers stay exactly the same at 10.
Little movement post-BBR cut
In terms of rates, while 2025 finished with a 0.25% cut in BBR, any borrower anticipating rates having fallen by a similar amount since then, are likely to be sorely disappointed. There has been some movement but only just, although it is very early days in the year so far.
For two-year fixed-rates, Lloyds remains top but this time with a 4.45% rate (down from 4.53%), although only available to current account customers. The Furness offers a 4.54% deal, the Progressive’s Northern Ireland-only product is at 4.55%, while Halifax also offers a 4.55% deal.
The Progressive comes out on top for five-year fixes with its 4.62% deal, while Lloyds has not cut the rate on its 4.64% deal for current account holders at all, with Leeds now offering a 4.66% deal, down from 4.7% last month.
As is often the case, mutuals dominate the 95% LTV trackers, discounts or variable product space. Scottish Building Society remains at the top with its 4.74% two-year discount, followed by Furness with its 4.84% two-year discount, while the Nationwide now offers a 4.89% two-year tracker.
As mentioned, when it comes to 100% LTV mortgage, there are just 10 to choose from. Lloyds once again has its three-year fix at 4.44% - again only for current account holders – while the two same lenders again make up the top three with Bath Building Society’s two-year discount at 5.09% and Beverley Building Society’s three-year discount at 5.14% both still available.
These are very early days, but it’s possible to see a direction of travel in product numbers and rates that should be sustained if demand from first-time buyers continues to develop. There’s no reason to suggest it won’t and it’s likely that those new to homeownership will require advice in even greater numbers than they have done over the last two years.
