‘Buyers are back’ as mortgage rates dip to three-year low, says Zoopla

Average mortgage rates have fallen to their lowest level since 2022 and are “fuelling the desire to move”, according to Zoopla’s latest house price index (HPI).

Richard Donnell, Zoopla’s executive director of research, said: “The 2026 market has hit the ground running with a rebound in demand levels, following a quiet end to 2025.

“With mortgage rates stabilising at the lowest level in 3 years, buyers are back - but they have more choice than they’ve had in 8 years.”

The HPI shows the average mortgage rate for new loans dropped to 4% in December 2025, the lowest since September 2022.

Meanwhile, average UK house prices now stand at £269,800, up 1.2% over 2025, which is below the 1.9% growth recorded in 2024.

However, house price growth varied across the country. The north west saw the strongest annual rise at 3.5%, while London recorded a 0.7% fall, which Zoopla attributed to “affordability pressures, higher stamp duty costs and a much greater choice of homes for sale”.

Stock levels have also risen. The number of homes for sale in the four weeks to 20 January 2026 was 6% higher than a year earlier, with estate agents now marketing an average of 34 properties, representing the highest figure in eight years.

A total of 1.2 million homes were sold in 2025, the highest number since the pandemic.

Tanya Elmaz, managing director of intermediary sales at housing association Together said: “The modest rise in house prices highlights what was ultimately a challenging year for the property market. Growth remained subdued as inflation remained stubbornly high, leading to elevated borrowing costs, and uncertainty around the Budget caused many buyers and sellers to pause their plans.

“Even so, the outlook for 2026 is more encouraging. With more homes coming onto the market and mortgage rates continuing to fall, we expect activity to pick up pace as confidence returns. The sector should be ready for a rebound as buyers who delayed decisions now seem to be pressing ahead with their original plans.”