TL;DR
- The Bank of England base rate was 4.25% as of May 2026, down from a peak of 5.25% in 2023-24.
- Two-year fixed mortgage rates ranged approximately 4.0%-5.5% in early 2026 depending on LTV and lender.
- Your rate depends on loan-to-value ratio, credit history, property type, and product type.
- FCA MCOB rules require lenders to stress-test affordability at a rate above the initial product rate.
- The FCA regulates mortgage advice. Any broker or lender must be FCA-authorised.
Last reviewed: May 2026 | Sources: Bank of England, FCA, ONS
Mortgage rates in the UK are influenced by the Bank of England base rate, swap rates in financial markets, and each lender cost of funding and risk appetite. Use the UK mortgage affordability calculator alongside this guide to estimate how much you can borrow at current rates.
How UK mortgage rates are set
Lenders price mortgages by adding a margin above their cost of borrowing. For tracker mortgages, the cost of borrowing is directly linked to the Bank of England base rate. For fixed-rate mortgages, lenders use swap rates - derivatives that allow them to exchange variable for fixed interest payments over a set period. Swap rates move ahead of base rate changes and reflect market expectations for future rate movements. The Bank of England base rate was 4.25% in May 2026.
Fixed versus tracker mortgages
A fixed-rate mortgage locks in an interest rate for a defined period, typically two or five years. Monthly payments remain constant regardless of base rate movements. At the end of the fixed term, the borrower moves to the lender standard variable rate (SVR) unless they remortgage. A tracker mortgage follows the Bank of England base rate plus a fixed margin. An SVR is set by each lender at its discretion and is typically higher than fixed or tracker products.
Loan-to-value and how it affects your rate
Loan-to-value (LTV) is the mortgage amount expressed as a percentage of the property value. Lower LTV typically results in a lower interest rate. Moving from 85% LTV to 80% LTV by increasing your deposit can substantially reduce the rate. Use the mortgage affordability calculator to model LTV scenarios alongside income multiples.
RELATED GUIDES: Mortgages and Property Finance
Affordability and credit assessment
Under FCA mortgage conduct rules (MCOB), lenders must assess affordability before granting a regulated mortgage contract. Affordability assessment considers income, existing debts, committed expenditure, and stress-testing against potential rate increases. Credit history is assessed via credit reference agencies. County Court Judgments (CCJs), missed payments, and high credit utilisation all affect the rate offered.
Regulatory framework
Mortgage lending and advice in the UK is regulated by the FCA under the Mortgage Credit Directive as implemented in the UK following Brexit. All mortgage lenders and brokers must be FCA-authorised. The Financial Ombudsman Service handles complaints about mortgage lenders and brokers.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Mortgage products and rates change frequently. All mortgage lending is subject to status and affordability assessment. Always verify current rates with lenders or via an FCA-authorised broker.
Frequently asked questions
What is the current Bank of England base rate?
The Bank of England base rate was 4.25% as of May 2026. The Monetary Policy Committee publishes rate decisions and forecasts at bankofengland.co.uk.
How does a mortgage rate differ from a personal loan rate?
Mortgage rates are secured against property and typically carry much lower APRs than personal loans, which are unsecured. The trade-off is that failure to repay a mortgage puts the property at risk of repossession, whereas an unsecured loan does not.
What is APRC on a mortgage?
APRC (Annual Percentage Rate of Charge) is the measure used for mortgages. It includes the interest rate and mandatory fees spread over the full term, providing a single comparable figure. For mortgages, always compare using APRC and the initial rate for the fixed or tracker period.
Can I get a mortgage with a 5% deposit?
Yes. 95% LTV mortgages are available from a range of lenders. The government mortgage guarantee scheme has supported 95% LTV product availability. Rates at 95% LTV are higher than at lower LTV tiers.
What happens when my fixed rate ends?
At the end of the fixed term, the mortgage reverts to the lender SVR unless you remortgage. SVRs are usually higher than available fixed rates. The FCA requires lenders to contact borrowers before the end of a fixed term to provide information about available products.
How this guide was verified
This article draws on Bank of England MPC minutes, FCA MCOB sourcebook, ONS House Price Index, and HM Treasury mortgage guarantee scheme documentation. No secondary aggregator sites were used as sources.
