January 2026 - What’s New in Mortgages This Month?
- Jan 31
- 3 min read
January has begun with a familiar theme in the mortgage market: cautious optimism.
Following the volatility of recent years, lenders have entered 2026 with a stronger focus on stability and consistency.
While headline mortgage rates have not seen dramatic shifts, there have been several meaningful developments behind the scenes that borrowers should be aware of.
1. High LTV Products Remain Competitive
Products at 90% and 95% loan-to-value continue to be widely available, which is encouraging, particularly for first-time buyers trying to enter the market.
However, while availability remains, criteria at higher LTV levels are still tight. Lenders are taking a more measured approach, refining their underwriting rather than withdrawing products entirely.
Key areas of focus include:
Recent credit conduct
Employment stability and income consistency
Source and evidence of deposit
At 95% LTV, the margin for risk is minimal. Even relatively minor issues, such as missed payments within the last 12 to 24 months, can significantly impact both eligibility and product choice.
2. Swap Rates Have Settled
Although much of the public attention remains on the Bank of England base rate, fixed mortgage pricing is more directly influenced by swap rates.
In January, swap rates have shown a period of relative stability compared to the sharp and unpredictable movements seen over the past couple of years. This has allowed lenders to price products with greater confidence and consistency.
As a result, we are seeing smaller, incremental pricing changes rather than sudden repricing across the market. For borrowers approaching the end of fixed-rate deals in 2026, this more predictable environment is a welcome shift.
3. Buy-to-Let Stress Testing Remains Tight
Affordability assessments for buy-to-let mortgages continue to be conservative, particularly for higher-rate taxpayers.
While some landlords are benefiting from increased rental income over the past 12 months, which can support affordability calculations, lenders are still applying strict stress testing.
Key considerations include:
Portfolio size and overall exposure
Interest coverage ratios (ICRs)
Property energy performance ratings (EPCs)
For landlords planning to refinance this year, preparation is essential. Ensuring all documentation is up to date and accurate can make a significant difference to the outcome.
4. Remortgage Activity Is Increasing
As expected, January has brought a noticeable rise in remortgage enquiries. Many borrowers who secured fixed rates in 2021 and 2022 are now approaching the end of their deals.
One of the most common questions we are seeing is: Should I switch early or wait until my deal ends?
The answer depends on several individual factors, including:
Early repayment charges (ERCs)
The current lender’s follow-on or standard variable rate
Expectations around future interest rate movements
Switching early can be beneficial in some cases, but without a full cost comparison over the remaining fixed period, it can also prove more expensive. Careful analysis is key.
5. Affordability Assessments Remain Detailed
Lenders continue to take a detailed and thorough approach to affordability.
Expenditure is being reviewed closely, with particular attention given to:
Subscription services and discretionary spending
Existing unsecured borrowing
Childcare and household costs
Under the FCA’s responsible lending framework, affordability must be sustainable over the long term, not just manageable at the initial rate.
This means borrowers should expect a more in-depth review of their financial position.
Final Thoughts
The key message for January is clear: preparation matters more than timing.
While the market is showing signs of stability, lenders remain cautious and detail-focused.
Borrowers who take the time to organise their finances, understand their options, and seek advice early are likely to be in a far stronger position as the year progresses.