Modest house price growth may offset easing mortgage costs for home buyers this year, according to analysis by Moneyfacts.

The financial data experts said that easing mortgage rates may allow for a modest growth in house prices in 2026 without improving or worsening current affordability pressures on first-time buyers and homemovers.

Markets currently predict the Bank of England will lower the Base Rate from 3.75% to 3.25% this year.

Assuming the UK sees 2.5% annual house price growth in 2026, as the Office for Budget Responsibility predicts, a first-time buyer at 80% LTV borrowing £236,000 would pay £1,352 a month in January 2026, Moneyfacts said.

By the end of 2026, that same housebuyer would be able to borrow £241,900 while paying £1,345 a month in mortgage costs.

Likewise, someone remortgaging at 60% LTV could borrow an average of £215,000 in early January 2026, Moneyfacts said, paying £1,168 in mortgage costs.

By the end of 2026, the same buyer, borrowing the same amount, would pay £1,135 a month in mortgage payments, Moneyfacts said.

Moneyfacts head of news Adam French said: “After more than three years of higher borrowing costs, even small cuts in mortgage rates can have a meaningful effect on buyer behaviour. With markets expecting at least one further 25bps cut to the Base Rate, the mortgage landscape in 2026 may be more forgiving than at any point since 2021.

“Our modelling suggests that easing rates may make modest house price growth possible without stretching affordability further, an important shift after the intense affordability squeeze of 2022–2025.”

NAEA Propertymark president Mary-Lou Press said: “While lower rates may help first-time buyers offset rising prices, high deposits and stretched incomes remain major barriers for many. Home movers and remortgage borrowers, who typically hold more equity, are better placed to benefit.”