Mortgage Rates Are Falling Again… Is Now the Time to Buy? with Fraser Kelly

In this episode of the Scottish Property Podcast, Fraser Kelly, founder of Kelly Residential, returns to break down the current state of the UK and Scottish property market in early 2026.The conversation dives into falling mortgage rates, shifting buyer demand, rental market normalisation, and how AI is beginning to reshape property search and estate agency. Fraser also shares key insights on Making Tax Digital and what it means for landlords moving forward.📊 Economic & Mortgage Market UpdateUK inflation has fallen to 3%, signalling easing economic pressureUnemployment has risen to 5.2%, increasing the likelihood of rate cutsStrong expectation of a base rate drop from 3.75% to 3.5%SONIA swap rates are falling, with sub-4% mortgage deals returningLenders are becoming more competitive, with lower fees and better products emerging🏡 Scottish Property Market PerformanceScotland annual price growth: +4.9% (vs UK 2.4%)Average property price: £191,000Scotland currently outperforming the UK by more than 2xTop performing areas:South Lanarkshire: +10.3%North Lanarkshire: +9.4%High-demand locations include:MotherwellGlasgowPaisleyFalkirkKirkcaldy➡️ Demand is shifting toward commuter towns and more affordable areas👀 Buyer Demand & Market BehaviourProperties receiving 30–40+ enquiries per listingFirst-time buyers are returning but still facing affordability challengesOffers of 20%+ over Home Report still common in hotspotsExample: A Battlefield flat sold 24% over Home Report🏠 Rental Market TrendsAverage rent in Scotland: £1,021/monthRental growth slowed to +2.6% (down from 11.7% peak in 2023)Why demand is cooling:Fewer international studentsIncrease in purpose-built student accommodationMore renters transitioning into homeownership➡️ Key takeaway: The market is normalising, not crashing🧾 Making Tax Digital (Landlords)Starts: April 6, 2026Applies to landlords earning £50,000+ gross rental incomeNew requirements:Quarterly reporting to HMRCDigital accounting software requiredFull digital record keeping⚠️ Likely impact:Increased costs for smaller landlordsPotential exit of accidental landlordsFurther tightening of rental supply🤖 AI & The Future of Property SearchAI-powered search tools are being integrated into property platformsBuyers can search using natural language queriesImage recognition and digital staging tools becoming more commonHowever:96% of enquiries still come from traditional portalsAI adoption expected to be gradual💡 Key insight:Personal branding and trust will become even more important as AI levels the playing field💡