The Bank of England held Bank Rate at 3.75 per cent on 18 June 2026, its fourth hold in a row, with the next decision due on 30 July. Average fixed rates are still stubbornly high — Moneyfacts puts the typical two-year fix around 5.5 per cent and the five-year fix at a similar level — but the best-buy deals tell a happier story, with market-leading fixes now back under 4.2 per cent and lenders cutting almost daily. So will mortgage rates fall further in 2026? Probably a little, but the smart move is to shop the best buys and lock in early rather than wait.
Rates are not expected to tumble dramatically this year. Markets have shifted from pricing in two or three Bank Rate cuts to expecting a hold, or even a small rise, after an energy and geopolitical shock earlier in 2026. That means the headline Bank Rate is unlikely to rescue you. The good news is that a genuine price war has broken out among lenders, so the gap between the sluggish average rate and the sharpest deals is now huge. This guide shows you exactly where rates are, what is driving them, and the concrete steps that get you the best number.
Where UK mortgage rates are in July 2026
There are two numbers that matter, and they are very different. The average rate across every deal on the market is high because it is dragged up by older, expensive products and small lenders. The best-buy rate is what a well-qualified borrower with a healthy deposit can actually get. In mid-July 2026 the picture looks like this: Moneyfacts data shows the average two-year fix at roughly 5.5 per cent and the average five-year fix at a near-identical level, while the average Standard Variable Rate (SVR) sits painfully high at about 7.1 per cent.
The best buys are far cheaper. Danske Bank and Halifax have led with two-year fixes around 4.13 per cent, and Halifax and Barclays offer five-year fixes near 4.17 to 4.23 per cent (all with product fees of roughly £1,000–£1,100). Trackers and short-term variable deals are lower still, with the sharpest two-year variable around 3.96 per cent. On a low loan-to-value (LTV), Rightmove’s tracker shows the typical 60 per cent LTV two-year fix at about 4.40 per cent — a reminder that the more equity you hold, the closer you get to the market-leading rate.
| Deal type (July 2026) | Market average | Best buy (approx.) |
|---|---|---|
| 2-year fixed | ~5.5 per cent | ~4.13 per cent |
| 5-year fixed | ~5.5 per cent | ~4.17 per cent |
| 2-year tracker / variable | Varies with Bank Rate | ~3.96 per cent |
| Standard Variable Rate (SVR) | ~7.1 per cent | Avoid — remortgage off it |
The takeaway: never judge the market by the average. If you are being offered anything close to 5.5 per cent, you are almost certainly overpaying, and if you are sitting on an SVR near 7 per cent you should be actively looking to move.
What is driving rates: swaps, gilts and the Bank of England
Fixed mortgage rates do not follow Bank Rate directly. They are priced off swap rates — the cost to lenders of borrowing money at a fixed price for a set period — which in turn track gilt yields and, above all, what markets expect the Bank of England to do next. When investors think Bank Rate is heading up, swaps rise and fixed deals get more expensive; when they think it is heading down, swaps fall and lenders sharpen their pricing.
That is exactly the story of 2026 so far. Earlier in the year a geopolitical and energy shock pushed markets to expect rate rises, swap rates jumped and fixed mortgage rates crept up. As tensions eased and inflation data came in softer, swap rates fell back, funding costs dropped, and lenders began cutting — Nationwide alone reduced rates several times in a single month, and on one day six lenders cut within 24 hours. Commentators are openly calling it the start of a mortgage price war. Because swaps have already done much of the falling, the cheapest fixes can drop even while the Bank holds Bank Rate steady.
Will mortgage rates fall for the rest of 2026?
Forecasts are genuinely split. Markets currently expect the Bank to hold at 3.75 per cent at the 30 July meeting and most likely through the rest of 2026. Beyond that, the range of credible views is wide: Bank of America and ING have flagged the risk of a rate rise this summer or autumn; Oxford Economics, Pantheon Macroeconomics and Deutsche Bank lean towards rates staying put into 2027; and a minority, including former Bank chief economist Andy Haldane, argue weak growth could justify a cut.
For mortgage borrowers the practical conclusion is the same either way: do not bank on a big fall. The best-buy fixes have already priced in a fair amount of good news via lower swaps. If the Bank holds and inflation keeps easing, the sharpest deals may drift a little lower over the coming months. If the outlook sours, they could just as easily bounce back up. That asymmetry — limited upside, real downside — is why most brokers are advising clients to secure a competitive rate now and keep an eye out for something better before completion.
What different rates cost: a worked example
Small differences in rate add up fast over 25 years. The table below shows the monthly repayment on a £200,000 repayment mortgage over a 25-year term at a range of interest rates. The chart underneath plots the same figures so you can see how quickly the cost climbs.
| Interest rate | Monthly repayment | Total interest over 25 years |
|---|---|---|
| 3.5 per cent | £1,001 | ~£100,400 |
| 4.0 per cent | £1,056 | ~£116,700 |
| 4.5 per cent | £1,112 | ~£133,500 |
| 5.0 per cent | £1,169 | ~£150,900 |
| 5.5 per cent (near the market average) | £1,228 | ~£168,500 |
The jump from a best-buy 4.0 per cent fix to the market-average 5.5 per cent is about £172 a month — more than £2,000 a year, and over £50,000 in extra interest across the full term. That is the real value of chasing the sharpest deal rather than accepting whatever your existing lender offers.
Fixed, tracker or SVR: which to choose in 2026
With Bank Rate expected to hold and the direction of travel uncertain, the fixed-versus-variable decision comes down to your appetite for risk and how long you want certainty.
- Two-year fix — the cheapest fixed option right now and a good bet if you think rates will be lower when you remortgage in 2028. You take the re-broking cost and risk again sooner.
- Five-year fix — priced almost identically to the two-year, so you can lock in long-term certainty for little or no premium. Ideal if you value stable payments and are not planning to move.
- Tracker — follows Bank Rate plus a margin, and the best deals currently undercut fixes. It wins if Bank Rate is cut, but you carry the pain if it rises. Choose a tracker with no early repayment charge so you can switch to a fix if the outlook changes.
- Standard Variable Rate — at roughly 7 per cent this is almost always the worst place to be. If your fixed deal has ended and you have lapsed onto an SVR, remortgaging is usually the single biggest saving available to you.
Remortgaging or buying your first home in 2026
If your current fix ends in the next six months, start now. Most lenders let you reserve a remortgage rate three to six months ahead, so you can lock in today’s deal and still switch to a cheaper one if rates fall before completion — a free option worth taking. Our full guide to remortgaging in the UK in 2026 walks through the timing, fees and product-transfer trade-offs in detail.
First-time buyers face a tougher affordability test but have more options than the headline average suggests, from 95 per cent LTV deals to shared ownership and family-assisted mortgages. Our first-time buyer mortgage guide for 2026 covers deposits, schemes and what lenders look for. Whichever camp you are in, run your own numbers first: our free mortgage repayment calculator lets you compare monthly costs at different rates and terms in seconds, so you know exactly what a quarter-point movement means for your budget before you talk to a lender or broker.
How to secure the best mortgage deal now
The rate you are offered is not fixed by the market alone — several things within your control can move it by a full percentage point or more.
- Lower your LTV. Rates fall in bands at 90, 85, 80, 75 and 60 per cent LTV. Nudging your deposit or overpaying to cross a threshold before you apply can unlock a materially cheaper deal.
- Clean up your credit file. Check your reports with all three agencies, make sure you are on the electoral roll, keep credit-card balances low and avoid new borrowing in the months before applying.
- Use a whole-of-market broker. A good broker sees deals not offered direct, knows which lenders are lenient on your circumstances, and does the paperwork. Fee-free brokers earn commission from the lender.
- Lock a rate early. Because deals can be reserved months ahead and swapped down if rates drop, securing a competitive rate now protects you from a rebound while leaving the upside open.
- Weigh the fee against the rate. A headline-grabbing low rate with a £1,500 fee can cost more than a slightly higher rate with no fee on a smaller loan. Compare the true annual cost, not just the percentage.
Get mortgage-ready
For more UK mortgage and home-buying guides, visit GetSmartSaver.
Explore GetSmartSaver →
Frequently Asked Questions
Will UK mortgage rates fall in 2026?
The best-buy fixed rates have already fallen back under 4.2 per cent as swap rates eased, and a mortgage price war among lenders could push them a little lower. However, markets expect Bank Rate to hold at 3.75 per cent for the rest of 2026, so a large drop is unlikely. Rates could equally bounce back if inflation surprises on the upside, which is why most experts suggest securing a good rate now.
What is the average UK mortgage rate in July 2026?
According to Moneyfacts, the average two-year and five-year fixed rates are both around 5.5 per cent in July 2026, and the average Standard Variable Rate is roughly 7.1 per cent. The best-buy deals are much cheaper — leading two-year fixes are near 4.13 per cent and five-year fixes near 4.17 per cent for borrowers with a decent deposit.
Should I choose a two-year or five-year fix?
They are priced almost identically right now, so a five-year fix gives you longer certainty for little extra cost. A two-year fix makes sense if you expect rates to be lower when you remortgage in 2028, or if you may move home soon. Consider the early repayment charges either way, as they are usually larger and last longer on a five-year deal.
Is now a good time to remortgage?
If your current deal ends within six months, yes — start now. You can reserve a new rate three to six months ahead and switch to a cheaper one if rates fall before completion, so you lock in protection with no downside. Anyone sitting on a Standard Variable Rate near 7 per cent should act quickly, as remortgaging is usually the single biggest saving available.
How much does a 1 per cent difference in rate cost?
On a £200,000 repayment mortgage over 25 years, going from 4 per cent to 5 per cent raises the monthly payment from about £1,056 to £1,169 — roughly £113 more a month, or over £34,000 across the full term. Even a quarter-point matters, which is why comparing the best buys against the average is so worthwhile.
Do I need a mortgage broker?
You do not have to use one, but a whole-of-market broker can access deals not available directly, match you to lenders that suit your circumstances, and handle the application. Many are fee-free because they earn commission from the lender. For complex situations — self-employment, adverse credit or a high loan-to-value — a broker often more than pays for itself.
Last reviewed: July 2026. This article is for general information only and does not constitute financial advice. Mortgage rates change daily — always compare current deals and consider a qualified mortgage adviser before acting.
