Mortgage affordability continues to outperform renting despite rates pushing back above 5%, as lenders stretch criteria to keep deals moving.

New data from TwentyCi’s Q1 2026 Property & Homemover Report shows the average cost of servicing a mortgage is £493 per month lower than renting, with the gap widening to close to £1,000 in London. The figures show a persistent affordability advantage for buyers, even as borrowing costs remain elevated.

The report highlights a growing imbalance in the rental market, where costs are now consuming 45.5% of median disposable income. This pressure is continuing to drive demand for homeownership, despite tighter affordability and ongoing geopolitical uncertainty.

AFFORDABILITY CHALLENGE

For lenders and brokers, the key shift is in how affordability is being managed. Higher loan-to-income (LTI) multiples are becoming increasingly common, with major lenders moving toward 5.5x and 6x income to support borrowers in higher-value regions.

This evolution is being driven by necessity, particularly in the South, where affordability constraints are most pronounced and higher multiples are moving into the mainstream.

Pipeline conditions remain supportive. New instructions are up 5.1% year-on-year, with the South East leading at 8.9%, helping to sustain deal flow despite market headwinds.

At the same time, fall-through rates have reduced by 12.1% compared to 2025, suggesting stronger borrower commitment and improved case quality reaching offer stage.

TRANSACTION SPEED

The average time to exchange has increased to 134 days, raising the risk of mortgage offers expiring and reinforcing the need for more efficient processes and upfront information.

Regional divergence also remains a key theme for lending strategies. While southern markets continue to feel affordability pressure, Northern Ireland is outperforming with 10% annual house price growth, presenting a different risk and opportunity profile for lenders.

For buy-to-let, the report points to a more complex picture. Rental stock is rising, up 18.8% year-on-year to a six-year high, but affordability constraints appear to be biting. Let-agreed prices fell by 2% in Q1, suggesting tenant budgets are reaching their limits despite historically strong yields.

HOMEOWNERSHIP NECESSITY

Colin Bradshaw (main picture, inset), CEO of TwentyCi, said: “Global disruption and fixed rates surging back above 5% have certainly acted as a cooling influence, particularly in London.

“However, we are not seeing a ‘frozen’ market. With supply up 5% and transactions tracking higher than both 2023 and 2024, the market is continuing to tick along nicely.

“The real story for 2026 is the sheer necessity of homeownership; when renting costs nearly 50% of take-home pay, the drive for mortgage approval remains the primary financial goal for UK households.”