Scottish Mortgage Market Update: What Buyers and Homeowners Need to Know in 2026

The Scottish mortgage and housing market has changed considerably over the past couple of years. While mortgage activity has recovered and more first-time buyers have been securing mortgages, borrowing costs have recently started moving upwards again.

For anyone buying a home, remortgaging or investing in property in Edinburgh or elsewhere in Scotland, understanding what is happening with interest rates, mortgage availability and the Scottish property market can help when deciding what to do next.

Mortgage Rates Have Started to Rise Again

After a period of falling mortgage costs, the direction of travel has changed.

The Bank of England reduced Bank Rate from its previous peak of 5.25%, with the rate reaching 3.75% in December 2025. However, Bank Rate has subsequently remained at 3.75%, including at the Bank’s latest meeting in July 2026.

The decision reflects continuing uncertainty around inflation and energy prices. Three members of the Bank’s Monetary Policy Committee actually voted to increase Bank Rate to 4% at the July meeting.

This uncertainty has fed through into mortgage pricing.

According to the Scottish Government’s latest Housing Market Review, the average advertised two-year fixed mortgage at 75% loan-to-value increased from around 4.0% in January to 4.9% in May 2026. At 90% LTV, the equivalent rate increased from approximately 4.3% to 5.3%.

This means borrowers shouldn’t necessarily assume that waiting will automatically result in a cheaper mortgage.

What Does This Mean if You’re Remortgaging?

For homeowners approaching the end of a fixed-rate mortgage, reviewing the market early is becoming increasingly important.

Mortgage rates can change well before the Bank of England changes its headline interest rate because fixed mortgage pricing is influenced by financial market expectations about future interest rates.

The Bank of England has also warned that millions of households are still expected to experience an increase in mortgage repayments as existing fixed-rate deals expire.

If your current deal is coming to an end, it can therefore make sense to start reviewing your options several months beforehand rather than waiting until the final few weeks.

This gives you time to compare staying with your existing lender against remortgaging elsewhere and understand what the repayments would look like at today’s rates.

More First-Time Buyers Are Getting Mortgages in Scotland

There is more positive news for first-time buyers.

The number of mortgages advanced to first-time buyers in Scotland increased by 6% during 2025/26, while mortgages to home movers increased by 4.4%.

The average loan-to-value for Scottish first-time buyers was 82.8% in the first quarter of 2026, meaning buyers are continuing to purchase homes using a range of different deposit sizes.

Mortgage product availability has also remained relatively broad, giving borrowers options across different deposit and loan-to-value levels.

However, affordability remains important. Mortgage capital and interest payments for Scottish first-time buyers accounted for an average of around 19.7% of borrower income in Q1 2026.

Scottish House Prices Are Still Rising – But More Slowly

Scottish house prices have continued to increase, although the rate of growth has slowed.

Average house prices across Scotland increased by 3.3% during 2025/26. However, annual growth slowed to approximately 2% in the first quarter of 2026, the weakest growth recorded since the middle of 2024.

Property transactions have shown a similar pattern.

Residential property sales increased by 4.5% in 2025/26, reaching 104,339 transactions, but more recent indicators suggest that activity has started to soften.

For buyers, a slower market can sometimes create more room for negotiation, although conditions vary considerably between locations and individual properties.

What Is Happening in the Edinburgh Property Market?

Edinburgh remains one of Scotland’s most important and competitive housing markets, but there are signs that supply and activity are changing.

The Scottish Government’s latest review reported that property listings in the City of Edinburgh were 8.9% lower year-on-year during Q2 2026.

Lower stock can help support property prices in desirable parts of the city, even when the wider mortgage market becomes more cautious.

Buyers in Edinburgh also need to remember that the Scottish buying process is different from England and Wales. Properties are commonly marketed as “offers over”, and in competitive situations a closing date may be set.

Crucially, if you offer substantially more than the Home Report valuation, a mortgage lender may not necessarily lend against the full amount you’ve offered. Buyers may therefore need additional cash to fund the difference.

Having your mortgage position understood before making an offer can be particularly useful in a competitive Edinburgh market.

No Change to Scottish LBTT Rates

There has also been some useful certainty around property taxation.

Scotland uses Land and Buildings Transaction Tax (LBTT) rather than Stamp Duty Land Tax.

For the 2026/27 financial year, the Scottish Government has kept residential LBTT rates and bands unchanged.

The standard residential nil-rate band remains £145,000, while qualifying first-time buyers can benefit from relief that effectively increases their nil-rate threshold to £175,000.

The Additional Dwelling Supplement remains at 8%, which is particularly important for landlords, second-home buyers and some property investors to factor into their purchase costs.

More Choice for Buy to Let Borrowers

Landlords are also seeing considerably more mortgage choice than they were a year ago.

Across the UK, the number of available Buy to Let mortgage products increased from 4,144 in June 2025 to 5,194 in June 2026, an increase of more than 25%.

Greater product availability doesn’t necessarily mean every landlord will qualify for a cheaper mortgage. Rental coverage calculations, deposit requirements, personal circumstances and the type of property can all influence which lenders and products are available.

Scottish landlords also need to consider Scotland-specific property taxation and landlord regulations alongside the mortgage itself.

Should You Fix Your Mortgage Now or Wait?

There isn’t a single answer that will be right for every borrower.

Mortgage rates could move in either direction as markets respond to inflation, economic growth, energy prices and expectations for future Bank of England decisions.

The important point is that Bank Rate does not need to fall for mortgage rates to fall – and it doesn’t need to rise for fixed mortgage rates to increase.

That’s why trying to predict the exact bottom of the mortgage market can be difficult.

For someone approaching the end of a mortgage deal, buying a property or planning an investment, it is generally more useful to understand the deals available now and how the repayments fit your finances.

Getting Mortgage Advice in Edinburgh and Scotland

The Scottish mortgage market remains active, but borrowers are dealing with a combination of higher mortgage rates, changing affordability and a property market that varies considerably from one part of Scotland to another.

Understanding your borrowing position early can be particularly useful if you’re a first-time buyer, planning to move home or approaching the end of an existing mortgage deal.

Mortgage Force provides whole-of-market mortgage advice to buyers, homeowners and landlords across Edinburgh and Scotland.

If you’d like to discuss your circumstances, visit our Mortgage Broker Edinburgh & Scotland page to find out more about our mortgage services and the Scottish home-buying process.

Your home may be repossessed if you do not keep up repayments on your mortgage.