The Mortgage Reset: Why 2026 Could Reshape Investor Demand
For the last few years, property conversations have been dominated by interest rates.
But the next phase of the market is not just about rates falling or rising. It is about who can borrow, how much they can borrow, and what happens when millions of fixed deals end at once.
Two recent developments highlight the shift:
A major lender launching a 98% mortgage with strict eligibility rules
Around 1.8 million fixed-rate mortgages due to expire in 2026
Individually, these are interesting.
Together, they signal a structural change in the mortgage market — one that investors cannot afford to ignore.
The 98% Mortgage That Many Buyers Can’t Use
Santander recently launched a mortgage allowing first-time buyers to borrow up to 98% of a property’s value, one of the highest loan-to-value products offered by a major UK bank in years.
At first glance, that sounds like a major boost for affordability.
But the detail tells a different story.
The product:
Requires a minimum £10,000 deposit
Has a maximum loan size of £500,000
Caps borrowing at 4.45 times income
Excludes flats and new-build homes
Excludes self-employed buyers
In other words, a headline-grabbing 98% mortgage exists — but only for a narrow slice of buyers and property types.
This matters because:
Flats are the main entry point to ownership in urban areas
Many first-time buyers are self-employed or have complex incomes
Higher-priced areas quickly exceed the £500,000 cap
The result is a product that signals lender caution, not a return to easy credit.
At the same time, borrowing limits are being stretched in other parts of the market.
First-time buyers borrowing up to 95% may be able to obtain up to 5.5 times their salary, and a growing number of lenders, including Nationwide and NatWest, will now let some homebuyers borrow up to six times their income.
While Santander is the largest lender so far to go above 95% loan-to-value, it is not the first. Skipton and Yorkshire building societies have offered deals allowing buyers to borrow 100% and 99% of a property’s value respectively.
Deposits Remain the Biggest Barrier
According to Santander data:
52% of UK adults say saving a deposit is the biggest barrier to buying
The average first-time buyer deposit with the bank last year was over £85,000
That is not a marginal affordability issue.
It is a structural constraint on buyer demand.
For investors, this has a direct implication:
If deposits remain the biggest barrier to ownership, rental demand remains structurally supported.
The Remortgage Wave: 1.8 Million Deals Ending
While attention focuses on first-time buyers, a far larger event is quietly approaching.
Around 1.8 million fixed-rate mortgages are due to end in 2026
This is the tail end of the ultra-low-rate period.
Many borrowers coming off five-year fixes taken in 2021 will face significantly higher monthly payments when they refinance.
At the same time:
The average standard variable rate (SVR) is about 7.25%
A borrower with a £250,000 mortgage could save more than £500 a month by switching from an SVR to a deal around 3.65%
That gap shows how exposed borrowers are if they fail affordability checks or cannot secure a new fixed rate.
Mortgage Rates Are Falling — But Affordability Still Bites
The mortgage market itself is becoming more competitive.
There are now more than 7,100 mortgage products available — the highest since 2007
Best-buy remortgage rates are around:
3.64% for two-year fixes
3.70% for five-year fixes
On paper, that looks like improving conditions.
But the key issue is not just the rate. It is whether borrowers qualify at those rates under stricter stress tests.
Many who fixed at ultra-low rates will now:
Face higher monthly costs
Fail affordability checks for new deals
Be forced to sell, downsize, or remain on expensive SVRs
What This Means for the Rental Market
When mortgage affordability tightens, three things typically happen.
1) Fewer first-time buyers can purchase
Even with 98% mortgages available, strict rules exclude large segments of the market.
2) Some homeowners are forced back into renting
Those unable to refinance may sell and re-enter the rental sector.
3) Demand concentrates in more affordable regions
Buyers stretch budgets less and look for cheaper areas.
For investors, that creates two structural trends:
Rental demand stays strong
Regional markets outperform expensive cities
The Hidden Risk: Refinancing Stress for Landlords
The remortgage wave does not just affect homeowners.
Landlords who fixed five-year deals around 2021 are also approaching refinancing.
If:
Rental stress tests remain strict, and
EPC upgrade costs are rising, and
Affordability margins are tighter,
some investors will:
Sell marginal assets
Exit high-cost markets
Consolidate into stronger-yielding regions
That creates both supply pressure and buying opportunities.
The Investor Opportunity in a Credit-Constrained Market
Mortgage markets shape property markets.
When credit tightens:
Prices soften at the margins
Stock comes to market from stressed sellers
Rental demand strengthens
Investors who understand this cycle typically focus on:
Strong-yield locations
Properties with clear refinancing headroom
Assets attractive to renters, not just buyers
Because in a constrained credit environment, cash flow matters more than capital growth forecasts.
What Smart Investors Should Be Watching in 2026
Key indicators to track:
How many borrowers move onto SVRs
Refinancing approval rates
Deposit levels among first-time buyers
Regional differences in lending criteria
Rental demand in lower-price markets
These will tell you far more about the direction of the market than base rate headlines alone.
Final Thought: The Market Is Entering a Lending-Led Phase
The past few years were about interest rate shocks.
The next phase will be about credit conditions and refinancing realities.
With:
1.8 million mortgages resetting in 2026
High-LTV products available but heavily restricted
the UK housing market is entering a period where borrowing power, not just pricing, drives outcomes.
For investors, that is not necessarily a threat.
It is often where the best opportunities emerge.
The key is understanding the numbers before the market moves.
If you are an investor, use our investment calculator to model yields, refinancing headroom, and long-term cash flow.
If you are a first-time buyer, try our first-time buyer calculator to see what you can comfortably afford — not just what a lender might offer.
Because in this market, the smartest decisions start with the right data.