The headlines

• 2025 was about adjustment and resilience.

• The Budget affected sentiment more than fundamentals, creating hesitation rather than structural damage.

• Housing is normalising, not overheating and that’s a healthier place to be.

• First-time buyers emerged as the market’s ‘anchor’, changing its shape and behaviour.

• 2026 is about stabilisation and confidence returning, supported by easing rates, improving affordability and more realistic expectations.

2025 wasn’t a dramatic year - it was a re-pricing and re-balancing year

After the volatility of previous years, the UK housing market spent much of 2025 finding its footing. 

House price growth slowed (around 0.6% annually), and sentiment softened toward year-end, possibly relating to uncertainty around the Autumn Budget.

Buyers and lenders remained active, customer behaviour shifted: decisions were taken more thoughtfully outweighed improving affordability.

2025 was the year for remortgaging and product transfers.  We saw a higher proportion of remortgaging in H1 but more Product Transfers in H2 with advisers prioritising certainty, speed and retention with advisers maintaining strong on-going relationships. 

Confidence is as important as pricing

Activity ebbed and flowed around stamp duty changes, tax speculation, interest-rate expectations and, ultimately, the Budget. As the year progressed, mortgage pricing eased, stress rates softened, and approvals rose. 

Yet the Autumn Budget’s £26bn tax measures fostered hesitation among discretionary movers. Many could transact but instead chose to wait and see.

Efficiency and AI underpinned mortgage market stability

Margin pressure made operational discipline essential for mortgage lenders. AI stopped being ‘an experiment’ and became a bigger part of the infrastructure, supporting affordability modelling, underwriting triage, fraud detection and case prioritisation.

All told, we saw faster, more consistent decisions, coupled with consistent standards, that prevented instability.

First-time buyers became the backbone of the market

One of the most important areas of 2025 was who was driving activity.

First-time buyers accounted for roughly 40% of transactions. The average size of first-time buyer mortgages reached record levels, reflecting both house prices and affordability but also confidence that rates had peaked.

The character of the first- and second-time buyer market changed, with more needs-based buying and less discretionary moving. And, importantly, prequalification and front-loaded advice reduced failed applications and broken chains, making journeys more efficient.

Policy shifts reshape advice

The announcement that from April 2027, unused pension funds will fall within Inheritance Tax scope, changing family wealth strategies.

Intergenerational support, whole-of-life protection and integrated planning will move centre stage, and mortgage advice will no longer be siloed – a large opportunity exists for brokers as borrowers need holistic solutions more than ever. 

The starting point for 2026 is very different from 2025

Inflation seems more stable but requires close watching. Interest rates are expected to trend down gradually. Wage growth is now outpacing house price growth. And crucially, buyers have adjusted their expectations.

Most major forecasters expect modest UK house price growth of 2–4% in 2026, which represents a stabilisation compared to previous boom years (source: Nationwide).

Mortgage lending volumes are forecasted to grow by around 4%, even if transaction numbers remain slightly subdued (source: UK Finance). That tells us something important: larger loans but fewer moves. And that will inevitably mean more advice-led borrowing.

First-time buyers are expected to remain central to demand, while movers return more cautiously as confidence continues to build.

We’re expecting greater confidence to re-engage with full mortgage advice reviews in 2026, with 2026 looking to be a bump market for refinancing.   At the same time, lenders continue to invest heavily in streamlining product transfer journeys so on-going client engagement strategies will be absolutely critical.

The bigger picture: 2026 is that we are cautiously optimistic for 2026

2026 is shaping up as a year of measured growth.

Lower mortgage rates and improving supply are expected to lift activity modestly but no one is forecasting runaway growth, with re-financing playing a critical role.

Instead, we’re entering a phase where:

• Income growth starts to catch up with prices

• Debt becomes cheaper but still constrained

• Housing becomes more needs-driven and advice-led
  
  Analysts are calling this the start of a ‘housing reset’, driving a return to sustainable fundamentals.