Payments have risen by more than £100 since late 2025, as analysts describe a functioning but slowing market
Scottish homeowners are now paying more than £1,200 a month on average to service their mortgages — and analysts warn the squeeze is far from over.
That figure, drawn from Rettie Financial Services’ Scottish Mortgage Market Briefing 2026, marks a rise from under £1,100 per month at the end of 2025. The increase of more than £100 in under a year may look modest on paper, but it is the trajectory, not the current level, that is unsettling the market.
That concern hardened just days after the Rettie report landed. The Bank of England (BoE) raised Bank Rate by a quarter of a percentage point to 4% on 5 November — its first increase since 2023 — reinforcing the briefing’s central warning: the market continues to function but appears to be slowing.
A market slowing under pressure
The number of mortgage approvals in the UK is down approximately 19% year-on-year in 2026 due to rising rates, constrained affordability and weaker market sentiment. That is a UK-wide figure, but it reflects the same forces pressing on Scottish borrowers. Purchase approvals fell to 53,400 in September — their lowest since December 2023 — and the trend has been consistent throughout the year.
Rettie’s research shows the affordability picture is particularly stretched in Scotland’s main urban centres. Mortgage payments are consuming around 27% to 38% of average household income in Scotland’s largest cities — a range that leaves limited margin for further rate rises without meaningfully changing buyer behaviour.
Dr John Boyle MRICS, Director of Research and Strategy at Rettie, in Edinburgh, was direct in his assessment: “2026 has been a challenging year so far in the mortgage market due to rising rates, increasing costs and weakening affordability. The impact to date has been slight compared to the rate jumps experienced in 2022/23, but conditions do not look like improving and will likely become more challenging over the next 6–12 months. The market has coped with steeper rises in mortgage rates and costs before and, although the outlook looks bleaker than at the time of our previous report this time last year, the housing market does remain active.”
That last point matters. House sales in Scotland in 2026 are stable compared to the same period last year, suggesting that while sentiment has cooled, transactional activity has not collapsed. The market is slowing, not stalling.
The geopolitical factor brokers cannot ignore
One of the more striking elements of the Rettie briefing is the directness with which it links global events to Scottish mortgage costs. The report attributes the 2026 reversal in mortgage market conditions directly to the Middle East conflict, which it says is beginning to have material impacts on housing and mortgage markets through elevated swap rates and inflationary pressure.
UK inflation stood at 3.5% in September, well above the BoE’s 2% target — a gap that made November’s rate rise all but inevitable. Market pricing has Bank Rate at approximately 4.79% by November 2027, according to the latest SONIA curve data, suggesting the pressure on mortgage costs is far from spent.
For brokers advising clients approaching the end of fixed-rate deals, this trajectory is a planning tool. Those who locked in during the 2024 and early 2025 rate-cutting period are now exiting into a materially different environment.
Where relief might come from
The Rettie report is not uniformly downbeat. The Scottish Government’s recently launched First Homes Fund and the UK Government’s Your First Home scheme could draw more buyers back into the market, though the latter is restricted to new-build properties. Relaxation of mortgage borrowing rules by the Financial Policy Committee of the BoE has enabled more first-time buyers (FTBs) to borrow at higher levels, with the potential for further relaxation ahead.
FTBs remain a key driver of market activity, accounting for over half of all mortgage sales — a dynamic that will shape broker pipelines disproportionately as the remortgage market remains under pressure from rising costs.
The longer-term outlook in the report points towards gradual improvements in lending conditions, but the near-term message is clear: elevated swap rates and persistent global uncertainty will likely push average mortgage costs higher across the next six to twelve months.
For brokers, that translates into more complex client needs, more proactive client reviews, and a sharper focus on what affordability tools are actually available to borrowers who may feel they have run out of options.
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