UK Mortgage Payments Drop by £119 Monthly as Rates Fall to 4.23%
Mortgage Payments Fall £119 Monthly, Rates at 4.23%

UK Mortgage Payments Drop by £119 Monthly as Rates Fall to 4.23%

Homebuyers across the United Kingdom are experiencing significant financial relief, with monthly mortgage payments decreasing by an average of £119 compared to the same period last year. According to recent data from Rightmove, typical monthly repayments stood at £1,592 in January, a notable reduction from £1,711 in January 2025.

Decline in Mortgage Rates

The primary driver behind this reduction is a substantial fall in mortgage rates. The average two-year fixed mortgage rate dropped to 4.23% in January, down from 4.99% in the previous year. Rightmove's calculations are based on a scenario where buyers provide a 20% deposit and repay their mortgage over 25 years on a two-year fixed deal, with fees averaging around £999.

Mixed Trends in House Prices

While mortgage costs are easing, the UK housing market presents a complex picture. Average UK house prices increased by 2.4% to £270,000 in the 12 months to December 2025, though this growth slowed from 2.8% in the 12 months to November 2025. However, between November and December 2025, average prices decreased by 0.7%, compared to a smaller decrease of 0.2% in the same period 12 months ago.

Regional variations are evident:

  • In England, average house prices rose to £292,000, marking a 1.7% increase.
  • Wales saw a significant rise to £215,000, up by 5%.
  • Scotland experienced growth to £191,000, an increase of 4.9%.

Slowing Rent Inflation

Alongside these mortgage and house price trends, rent price growth has also moderated. Average UK monthly private rents increased by 3.5% to £1,367 in the 12 months to January 2026, down from 4% in the 12 months to December 2025. Regional breakdowns show:

  • England: Average rents rose to £1,423, a 3.5% increase.
  • Wales: Rents increased to £826, up by 5.8%.
  • Scotland: Rents grew to £1,021, a 2.6% rise.
  • Northern Ireland: In the 12 months to November 2025, average rents reached £875, a 5.6% increase.

Within England, private rent annual inflation was highest in the North East at 8.0%, while London recorded the lowest at 1.1% in the 12 months to January 2026.

Broader Context

Despite a slight overall decline in house prices by 0.7% in the UK, aspirations for homeownership remain high among the population. This combination of lower mortgage payments, mixed house price movements, and slowing rent growth suggests a shifting landscape for UK property buyers and renters, potentially making homeownership more accessible in the current economic climate.