A steadier second half of 2026 in sight?

The first half of 2026 has been a reminder that the mortgage market does not operate in isolation. While domestic economic conditions have remained an important influence on the mortgage market, it has been events much further afield which have had the greatest impact. Continued conflict in the Middle East and the resulting geopolitical uncertainty created fresh volatility across financial markets, with fluctuating swap rates making it difficult for lenders to maintain consistent pricing and giving borrowers little certainty over where rates might move next.

Despite those external pressures, the mortgage market has continued to function remarkably well. Competition has remained strong, lenders have kept refining their propositions and, whenever funding costs have allowed, rates have moved lower. Although conditions have been far from straightforward, the industry has adapted well, ensuring borrowers have continued to benefit from product choice throughout a demanding period.

That ability to respond quickly leaves me cautiously encouraged about the months ahead. If geopolitical tensions continue to ease and funding markets become more predictable, lenders should be in a stronger position to price products with greater confidence, allowing borrowers to make decisions without feeling the market has shifted again before applications have been submitted.

Much of the activity during the second half of the year is likely to come from the remortgage market. Thousands of borrowers continue to reach the end of fixed rate deals arranged under very different economic conditions and many will need help balancing monthly affordability with longer-term financial planning. This is another reminder that mortgage advice is about much more than securing the lowest available rate. Understanding an individual's circumstances, future plans and the wider product landscape has rarely been more valuable.

Alongside remortgaging, the industry's longer-term success will continue to depend on its ability to support first-time buyers. This remains the area where the greatest barriers exist and where meaningful progress would have the biggest impact on the wider housing market.

Yorkshire Building Society's latest housing report highlights why. While 88% of UK adults believe homeownership is important, confidence in achieving it falls sharply as people get older. Around 76% of those aged between 25 and 34 still expect to own a home, yet that figure declines to 59% among 35 to 44-year-olds, 38% for those aged 45 to 54, 20% for those aged 55 to 64 and only 8% among over-65s who do not already own. The findings suggest many people gradually abandon the belief that buying a home is realistically within reach, reinforcing the need for continued work around affordability, housing supply, lending flexibility and improving confidence in the homebuying process.

However, there are signs that more borrowers are beginning to explore their options. According to Twenty7tec, total mortgage searches reached 1,774,749 during June, representing a 7% increase on May and 2% growth compared with the same month last year. Residential purchase searches rose by 8% month-on-month and 5% year-on-year, while first-time buyer searches increased by 9% and residential remortgage searches climbed by 14% over the month. Search volumes are often one of the earliest indicators of borrower intent and suggest households are becoming more willing to engage with the market again.

That growing interest should still be viewed in context. The latest RICS Residential Market Survey suggests activity remains subdued, although the pace of weakening has eased in recent months. New buyer enquiries and agreed sales both improved slightly during June, while expectations for sales activity over the next three months also became less negative than earlier in the year. At the same time, fewer new instructions are coming onto the market, pointing towards a tightening supply pipeline. Taken together, the survey suggests the market is moving towards a steadier footing rather than preparing for a significant upturn, with respondents expecting sales volumes to remain broadly flat over the next twelve months and house prices to edge modestly higher.

That feels like the most realistic expectation for the remainder of 2026. Affordability continues to restrict many would-be buyers, particularly those hoping to purchase their first home, and wider economic uncertainty has by no means disappeared. Even so, the market has demonstrated an ability to keep moving forward through a difficult first half of the year. If funding markets remain more predictable and lenders can continue competing strongly on price and proposition, the second half should provide fresh opportunities across both purchase and remortgage business. Progress may be measured rather than dramatic, but after such an unpredictable start to the year, that would represent a welcome outcome for borrowers, brokers and lenders alike.

Samantha Ward, Commercial Director at Hanley Economic Building Society