The last few years have been bruising for everyone in the mortgage ecosystem. An unthinkable pandemic, cost of living woes, spiralling interest rates and geopolitical uncertainty have made for a potent concoction. And the last Autumn Statement failed to deliver any meaningful stimulus to the market.

But there is growing cause for optimism – here are five reasons to feel good about the outlook for the mortgage market…

Arrears remain low

UK homeowners proved more resilient than many feared in the face of cost and rate pressures. Having edged up in 2024, arrears are now easing, with one in 80 mortgages behind on payments. This compares to a long-run average of one in 50, and one in 24 at the height of the financial crisis.

Low arrears rates are, of course, a good thing for homeowners and lenders. And there’s a useful second-order effect, too, as lenders have more confidence, and capital, to lend. We mustn’t be complacent, however, as the market strives to innovate whilst continuing to lend responsibly.

Inflation is slowly easing

Having peaked at an eye-watering 9.6% in late 2022, inflation is back within striking distance of the Bank of England’s 2% target. That means a pound goes further at the tills and at the pump, with salary growth (just) outpacing inflation. For brokers, this translates into stronger affordability outputs and a broader range of viable options for clients.

Again, now is not the time for complacency. Considerable uncertainty remains about the outlook for inflation – the Bank of England’s recent knife-edge voting splits are testament to that. And even as inflation does return to more normal levels, we mustn’t underplay the cumulative impact of recent years: a pound five years ago is now worth just 78p, unprecedented since the early 1990s. But slowly, surely, some kind of normality seems to be returning.

Independent advice goes from strength to strength

Mortgage customers continue to put their trust into independent advice, with a record five out of six residential completions in 2025 sold via a broker. This is marginally up on the previous year, and marks a fundamental shift from a 70% pre-pandemic average (with less than half of mortgages being intermediated shortly after the financial crisis).

Despite some fears of disintermediation stemming from recent regulatory changes (for example, Mortgage Conduct of Business (MCOB) changes around execution‑only product transfers) and the momentum behind AI adoption in many parts of our lives – it remains clear that consumers demand independent, human advice when it comes to their biggest financial transactions.

Lenders are (genuinely) innovating

The pace of innovation in terms of lender proposition and criteria shows no signs of slowing, nudged by meaningful regulatory easing. Whether it’s no / low deposit products for first-time buyers, tools to support affordability, wider options in retirement or a fresh look at how to support skilled migrants on visas – recent changes are solving a wide range of customer problem statements. Meanwhile, lenders are embracing technology to make decisions faster and with more consistency.

The numbers validate that this trend is real. The percentage of residential completions at higher income multiples, for example, reached their highest point for years in December 2025. Clearly,  it’s essential that lenders continue to embrace innovation whilst helping more people onto the ladder. And, for all the progress, let’s be clear that broader fundamentals will continue to challenge homeownership – including affordable housing and the pace of homebuilding – albeit house price-to-income has eased from just over eight times in 2022 to closer to seven times today.

Mortgage demand is up in early 2026

After a challenging end to last year – not least due to budget-related market malaise – leading indicators point to something of a new year bounce. Mortgage illustrations generated by brokers in January were up 10% compared to monthly norms in 2025, suggesting more than just some pent-up demand from the festive period.

Whether it’s further cuts to mortgage rates (deals in the 3.50% mark in January represented some of the lowest rates for five years), criteria expansion, easing cost of living or lack of too many gremlins in the Autumn Statement (at least from a residential perspective) – there appears to be some returning momentum. For all of us in the industry, and of course our clients and customers, let’s hope it’s here to stay.

Alex Beighton is head of mortgage products at Nottingham Building Society