MORTGAGES
The Bank of England held its base rate at 3.75% on 18 June 2026, a decision carried by a seven to two vote. Average five-year fixed mortgage rates sit close to 5.5%, against a lender standard variable rate of around 7.13%, leaving borrowers who fixed before 2022 facing significantly higher costs at renewal.
- Base rate held at 3.75% since December 2025, most recently confirmed 18 June 2026.
- Average 2-year and 5-year fixed rates both sit close to 5.5%, roughly double the average seen in July 2021.
- The lender standard variable rate (SVR), the fallback if no new deal is arranged, averages around 7.13%.
- Around 1.8 million UK fixed-rate mortgages are due to expire in 2026, according to UK Finance.
Last reviewed: 07 July 2026
KEY FACTS
- Base rate: 3.75% (held 18 June 2026, 7-2 vote)
- Average 2-year fixed rate: around 5.5%
- Average 5-year fixed rate: around 5.5%
- Average standard variable rate (SVR): around 7.13%
- Best available 2-year fixed at 60% LTV: 4.24% (fee £1,014)
- Mortgages approved, April 2026: around 65,900 (Bank of England)
Where mortgage rates stand in July 2026
The Bank of England's Monetary Policy Committee held the base rate at 3.75% on 18 June 2026, a decision reached by a seven to two vote and the latest in a run of holds stretching back to December 2025. That stability has not translated into stable mortgage pricing. Market rate data put the average two-year fixed rate at roughly 5.5% and the average five-year fixed rate at a similar level in early July 2026, more than double the rates on offer in July 2021. For anyone whose fixed deal is due to end this year, the gap between the rate they locked in several years ago and the rate on offer today is the single biggest number in their household budget. UK inflation was running at around 2.8% to 3% in the run-up to the June decision, keeping the Bank cautious about cutting further, and two committee members voted for a rate increase rather than a further hold, a reminder that the direction of the base rate from here is genuinely contested rather than settled.
Why fixed rates move independently of the base rate
Fixed mortgage rates are priced mainly on swap rates, the wholesale cost at which lenders borrow to fund fixed-term lending, rather than on the Bank of England's base rate directly. Swap rates reflect where financial markets expect interest rates to be over the life of the deal, not where they are today. Earlier in 2026, swap rates rose sharply after the outbreak of conflict in the Middle East pushed lenders to reprice upward, even though the base rate itself did not move. Since then, swap rates have eased, and a number of the UK's largest lenders, including Nationwide, Yorkshire Building Society, NatWest, Barclays, TSB and Santander, have cut their fixed rates in response, in what some brokers describe as a mini price war. This matters practically: a borrower checking rates in March 2026 and again in July 2026 could see meaningfully different pricing on an identical product, with no change in the base rate at all.
Average rates against the best deals on the market
Average rates only tell part of the story. In early July 2026, the average two-year fixed rate across the market sat close to 5.5%, but the best rate available, from Nationwide at 60% loan-to-value with a £1,014 product fee, was 4.24%. That spread, more than a full percentage point, is largely explained by deposit size. Borrowers with a 40% deposit or more, or equivalent equity if remortgaging, are generally offered materially better pricing than those borrowing at 90% or 95% loan-to-value, because the lender's risk on the loan is lower. Product fees also change the comparison: a headline rate that looks cheaper can end up costing more overall once a £999 or £1,014 fee is added, particularly on smaller loans, where the fee makes up a larger share of the total cost. Mortgage product choice has also widened this year, with the number of residential mortgage deals on the market climbing back above 7,000 for the first time since March 2026.
The cost of doing nothing
Borrowers who let their fixed deal lapse without arranging a new one are moved onto their lender's standard variable rate, which averaged around 7.13% in July 2026, well above even the average fixed rate. On a £200,000 mortgage repaid over 25 years, the difference is significant: a repayment calculated at the average five-year fixed rate of 5.5% comes to approximately £1,228 a month, against approximately £1,430 a month at the average 7.13% standard variable rate, a difference of around £202 a month, or roughly £2,424 a year. Against the best available two-year fixed rate of 4.24%, the same loan costs approximately £1,082 a month, a gap of around £348 a month compared with the standard variable rate. These figures are illustrative only, based on a standard repayment calculation, and actual costs depend on the loan amount, term, fees and individual circumstances. The general pattern holds across loan sizes: a standard variable rate almost always costs more than an equivalent fixed deal.
Options for borrowers coming off a fix in 2026
Mortgage offers are typically valid for around six months once issued, and some lenders will honour an offer for up to twelve months, which means borrowers can lock in a rate ahead of their current deal ending without paying any early exit cost, provided the new deal only starts when the old one finishes. Bank of England data shows mortgage approvals reached roughly 65,900 in April 2026, the highest level in fifteen months, suggesting more borrowers are actively moving rather than defaulting to their lender's standard variable rate. The choice facing most borrowers is generally between a new fixed rate, which locks in payments for a set period regardless of what happens to interest rates, and a tracker or variable deal, which moves in line with the base rate and can fall if the Bank of England cuts rates later in 2026 or in 2027. UK Finance estimates that around 1.8 million fixed-rate mortgages are due to expire across the UK in 2026, following roughly 1.6 million that expired in 2025.
What the rest of 2026 could bring
Forecasts for the remainder of 2026 are genuinely split. Some economists expect the Bank of England to hold the base rate at 3.75% for the rest of the year, others expect a further cut if inflation eases, and a minority expect a rise if the effects of the conflict in the Middle East continue to feed through to prices via energy and import costs. The Bank's Monetary Policy Committee's next scheduled decision is 30 July 2026. Because fixed mortgage pricing tracks swap rates rather than the base rate itself, an actual base rate change is not required for fixed deals to move, up or down, before then. For homeowners with a deal ending in the coming months, the practical position is that current average rates, and the best deals available at a given loan-to-value, are the numbers that matter for budgeting, not speculation about where the base rate might go next.
What lenders are required to tell borrowers
The FCA requires mortgage lenders to treat customers whose deals are ending fairly, including prompting them ahead of the switch to a standard variable rate. Under the mortgage charter arrangements introduced during the 2023 rate rises, many borrowers can lock in a new deal early and still switch to a cheaper rate if one becomes available before the old deal ends, without paying a fee to do so. Borrowers approaching the end of a fixed term can request an updated mortgage statement from their lender at any time, showing the exact date their current deal ends and the standard variable rate they would move to if no action is taken. Combined with published average and best-buy rate data, this gives most homeowners enough information to compare the practical cost of switching against the cost of remaining on their lender's fallback rate.
For further reading on this topic, see UK Mortgage Rates: Are They Still Below 5% - And Where to Find Them, UK Mortgage Rates Forecast 2026-2027: Expert Predictions, Free UK Finance Tools 2026 - Tax, Mortgage, VAT, Salary & More and Scottish Mortgage Investment Trust: What It Is, What It Holds and How to Buy.
This article is for information only and does not constitute financial, legal or tax advice. Rules, rates and figures can change: always check current details with the relevant primary source or a regulated adviser before making a decision.
Sources
- Bank of England, Monetary Policy Committee decisions and mortgage approvals data
- Moneyfacts, average and best-buy fixed and standard variable rate data
- UK Finance, fixed-rate mortgage expiry estimates
- Financial Conduct Authority, mortgage charter and fair treatment rules
What is the Bank of England base rate right now?
The base rate is 3.75%, held on 18 June 2026 by a seven to two vote of the Monetary Policy Committee, the latest in a series of holds dating back to December 2025.
Why are fixed mortgage rates so much higher than the base rate?
Fixed rates are priced mainly on swap rates, which reflect market expectations for interest rates over the life of the deal, rather than on the base rate itself, so the two can move independently.
What happens if I do nothing when my fixed deal ends?
The mortgage automatically moves onto the lender's standard variable rate, which averaged around 7.13% in July 2026, materially higher than the average fixed rate.
Are mortgage rates expected to fall for the rest of 2026?
Forecasts are split. Some economists expect further base rate cuts, others expect the rate to be held at 3.75%, and a minority expect a rise if inflation from the Middle East conflict feeds through further.
How many fixed-rate mortgages are ending in 2026?
UK Finance estimates around 1.8 million fixed-rate mortgages are due to expire across the UK in 2026, following roughly 1.6 million in 2025.
