The Intermediary – January 2026 - Flipbook - Page 8
RESIDENTIAL
Opinion
Expect the
unexpected in 2026
T
he regulator’s road map
has landed, the Budget
is behind us, and we’ve
rounded off 2025 with
a base rate cut to 3.75%.
So, what does that mean
for market activity next year? Here’s
our top three expectations for 2026.
Some lenders will innovate
We now know that the Financial
Conduct Authority (FCA) intends
to consult on loan-to-income (LTI)
limits, responsible lending rules and
affordability for Retirement Interest
Only (RIO) mortgages in the first
half of 2026 with policy statements
expected in the laer half of next year.
These changes will allow lenders to
innovate and, according to the FCA,
“enable the mortgage market of the
future.”
Not all changes in
the Budget will affect
the market straight away
[...] This, along with
December’s base rate
cut – and the expectation
that there will be further
cuts this year – is going to
improve sentiment”
But lenders aren’t waiting for
regulation to innovate. The lending
market is teeming with people coming
up with all sorts of ideas and I’ve not
seen innovation on this scale and at
this speed in all my time working in
the industry.
Significant changes already this year
include inroads in foreign national
criteria, higher loan-to-values
(LTVs) for new-build lending and in
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The Intermediary | January 2026
particular flats. We’re certain, from
the conversations we’re having with
banks and building societies, that
there’s more to follow. We know of
one building society eyeing a move
into slightly-higher-than-high-street
levels of adverse credit – recognising
the demand and the margins in this
market. Another is weighing up an
interest-only proposition for firsttime buyers which could offer a 35- to
40-year term with the first 10 years on
interest-only, providing the mortgage
is advised.
Our tip: Expect to see lenders
pushing into market segments you
wouldn’t expect them to operate in.
Tech-driven scalability
This year we’ve seen more lenders sign
up to the same external system that
allows them to make changes to their
score criteria in a much simpler way.
Rather than lenders making their
own internal soware changes which
can be time consuming and costly,
the external provider makes changes
to their system. That way, all lenders
signed up to the soware can choose
to adopt the credit scoring changes
by tagging it on to their systems
straight away.
This is the kind of technological
innovation the market has been
crying out for.
Lenders can quickly mirror others’
changes at a lower cost and scale
quickly which we think is one of the
reasons behind much more rapid
innovation in 2025.
In 2026 – we expect to see more
lenders adopt similar or the same
technology which will make them
more fleet of foot and able to respond
quickly to broker feedback on what
the market really needs.
Buyer activity in H1
A handful of builders told us that their
web traffic died a death in the run
up to the Budget and the December
lull kicked in right at the start of the
HELEN PIERSON
is director at Mortgage Advice
Bureau New Homes
month. We’ve started to see an upli
in our own mortgage enquiries but
developers are telling us they don’t
expect any significant progress until
the New Year.
The Budget depressed a lot of people.
Although it wasn’t as bad as feared,
neither was there any major reason to
feel optimistic.
There was a general feeling of ‘let’s
enjoy Christmas – celebrate and be
happy’, with thoughts of moving
house postponed until at least midJanuary which is when developers
expect to see enquiries begin to
filter through.
We are expecting a busy Q1, but
this January may get off to a slightly
slow start.
Not all changes in the Budget will
affect the market straight away – the
‘Mansion Tax’, for example, won’t
take effect until 2028. This, along
with December’s base rate cut – and
the expectation that there will be
further cuts this year – is going to
improve sentiment, and that’s what
drives demand.
From the end of January up until
April – expect an active new-build
market with developers ready to make
some big deals at the end of April and
into May to get sales over the line.
Continued base rate cuts next year,
which may not directly feed into lower
mortgage rates, will help to buoy
sentiment among buyers and that,
along with product innovation, will
keep the market moving steadily into
the laer part of H1. ●
