January 2026 Sees Average UK Mortgage Payments Fall by £119: What Landlords Need to Know

Mortgage Costs Dip: A £119 Year-on-Year Reduction

January 2026 brought a notable cooling in mortgage costs across the UK. According to Rightmove Property News, the average monthly mortgage payment decreased by £119, or 7%, compared to January 2025, settling at £1,592. While there was a small increase compared to December 2025, the overall annual reduction is significant for both owner-occupiers and landlords.

This fall is primarily attributed to lower two-year fixed mortgage rates and a slowdown in house price inflation. London buyers have seen the most pronounced benefit, though regional variations remain important.

Why This Matters to Landlords

For landlords, this reduction has several operational and strategic implications:

• Rental Pricing Pressure: Lower mortgage costs for buyers, particularly first-time buyers whose payments dropped to an average of £975, may ease tenant affordability pressures but could also affect demand for rental properties in certain areas, especially where ownership becomes more accessible.

• Refinancing Opportunities: Buy-to-let mortgage rates and remortgage rates have also decreased year-on-year, presenting potential savings for landlords looking to refinance existing loans or expand portfolios.

• Regional Market Dynamics: The scale of mortgage cost changes varies regionally, meaning landlords should not assume uniform effects. London landlords, for example, may see more pronounced shifts in tenant demand than those in regions with smaller rate changes.

• Portfolio Risk and Cash Flow Management: For accidental landlords or those with thin cash flow margins, the drop in mortgage payments may offer breathing room but also signals a need to review rental yields relative to new market conditions.

Practical Steps for Landlords and Property Teams

1. Reassess Rental Pricing Strategies

Landlords and managing agents should review current rents in light of lower mortgage costs. This includes:

• Benchmarking rents against local market data considering changes in buyer affordability.
• Avoiding sudden rent increases that could reduce competitiveness if ownership is becoming more attainable.
• Adjusting rent-setting workflows to incorporate updated mortgage and housing market data.

2. Monitor Regional Housing Market Trends

Track local fluctuations carefully by:

• Subscribing to regional property market reports.
• Engaging regularly with local letting agents and market professionals.
• Paying special attention to London and the North East, regions highlighted for significant impact.

3. Evaluate Refinancing and Investment Options

Landlords with buy-to-let mortgages should:

• Consult mortgage brokers or financial advisers about lower-rate products.
• Analyse the cost-benefit of remortgaging versus existing terms, considering fees and exit penalties.
• Factor in how reduced mortgage rates affect overall portfolio profitability and expansion plans.

4. Communicate Clearly with Tenants

Inform tenants where appropriate about housing market context to support positive landlord-tenant relations. This transparency can help manage expectations amidst changing demand dynamics.

5. Verify Data and Maintain Compliance

Always cross-check mortgage rate and housing price information with trusted sources such as the Bank of England, UK Finance, or government statistics before altering pricing or advising clients.

Tailoring Approaches by Landlord Profile

• Single-Unit Landlords: Prioritise rental price reviews and tenant communication as a first step.
• HMO Operators: Consider how regional shifts affect shared housing demand and communal rent-setting.
• Portfolio Landlords: Conduct detailed financial modelling to optimise refinancing and rental strategies across diverse locations.
• Accidental Landlords: Review cash flow and consider professional advice on loan restructuring or sale options if needed.

Next Steps This Quarter

• Schedule portfolio reviews focusing on mortgage cost impact and rent benchmarking.
• Engage with mortgage brokers early to explore refinancing opportunities.
• Update rent review policies and tenant communications accordingly.

How Rentals & Sales Can Support

Our team offers bespoke portfolio reviews, compliance audits, and pricing strategy consultations tailored to these market changes. We help you interpret mortgage market shifts, evaluate refinancing options, and adjust rental strategies to preserve income streams and reduce risk.

Disclaimer: This article does not constitute financial advice. Landlords should seek independent professional advice before making mortgage or investment decisions.