Rising choice of low-deposit deals
Alongside falling rates, prospective mortgage borrowers also have more deals to choose from as the number of products available rose from 6,918 at the start of November to 7,054 one month later.
This increase in product choice is particularly significant for first-time buyers with a small deposit and homeowners with limited equity in their homes.
Indeed, Springall points out that more than 300 deals at 90% and 95% loan-to-value (LTV) were added to the market throughout November, which means “the volume of deals at these tiers now rests at their highest counts since March 2008”.
She added that this improvement in the number of high LTV deals should be “celebrated”, as greater competition among lenders gives borrowers more choice.
What’s next for the mortgage market in 2026?
“The improvement in cost and product availability of mortgages paints a positive picture for borrowers as we edge towards the New Year,” noted Springall.
Even though she recognises that 2025 has seen “a few ups and downs” and it’s hard to make firm predictions, she points out that
“all signs are looking encouraging for the mortgage market to thrive moving into 2026”.
And there could be at least one more piece of good news for borrowers this year, as forecasts suggest that the Bank of England will lower the base rate to 3.75% on 18 December. The base rate is a significant factor that can influence mortgage rates, so it’s possible that borrowers will be able to access even cheaper deals over the coming months.
However, it’s important to bear in mind that lenders may already be pricing in a base rate cut on their existing fixed rate deals. Furthermore, a range of other factors affect mortgage rates, so borrowers may not necessarily see a dramatic decrease in interest rates in the final weeks of the year and into 2026.
Falling rates will be particularly welcome to any homeowners planning to remortgage this year and beyond. And, encouragingly, the Bank of England expects around one third of mortgage accounts (three million households) to see their monthly payments fall over the next three years as they move onto cheaper deals.
For example, anyone coming to the end of a two-year fixed mortgage is likely to find rates are notably lower than their current deal, as the average two-year fixed rate in December 2023 stood at 6.04%, compared to the 2025 average of 4.86%.
But it may not be positive news for all borrowers, particularly those who took out a cheap five-year fixed deal in 2020 or 2021 and, consequently, have been shielded from higher interest rates.
The Bank of England calculates that 43% of mortgage accounts (3.9 million) will refinance onto higher rates and face higher monthly payments over the next three years. For a typical owner-occupier mortgagor coming off a fixed rate over the next two years, it estimates that their monthly payments could increase by £64.