After surging in March following Middle East energy market disruption, UK mortgage rates have started to ease. Here is where rates stand now, who benefits, and whether waiting for further falls is worth the risk.
What happened in March — and why rates are now falling
In March 2026, conflict in the Middle East sent oil and gas prices sharply higher, pushing inflation expectations up and causing swap rates — the wholesale cost that lenders use to price fixed mortgages — to spike within days. Average 2-year fixed rates crossed 5.5% for the first time since mid-2025, and hundreds of products were pulled and repriced.
Since mid-April, that pressure has partially eased. Markets have reassessed the likely duration and severity of the energy shock, swap rates have come off their peaks, and several major lenders — including Barclays, HSBC, and NatWest — have cut fixed rates. Average rates remain well above the January 2026 lows, but the direction has reversed.
The Bank of England held the base rate at 3.75% on 30 April, voting 8-1 with one member preferring an increase to 4%. The MPC noted that CPI has risen to 3.3% (March 2026) and is likely to move higher before falling back. Rate cuts are now unlikely before the final quarter of 2026 at the earliest.
Where rates stand now — May 2026
Product
March peak
May 2026
2-year fixed (avg)
~5.56%
5.81%*
5-year fixed (avg)
~5.54%
5.70%*
Best 2-yr (60% LTV)
~4.0–4.2%
4.45% (HSBC)
Best 5-yr (60% LTV)
~4.8%
4.73% (Nationwide)
Best tracker
—
3.96% (Halifax†)
SVR (typical)
~7.2%
~8%
BoE base rate
3.75%
3.75% (held)
*Moneyfacts average, 30 April 2026. †Halifax tracker at 60% LTV, fees £1,599. Rates change daily — check best buys before applying. Sources: HomeOwners Alliance, Which?, Moneyfacts, L&C.
The wide gap between the Moneyfacts average and the best-buy rates reflects the difference between a standard residential application and the most competitive terms — typically requiring a 40% deposit, clean credit, and direct application or whole-of-market broker access. Most borrowers will sit somewhere in between.
Should you fix now or wait for rates to fall further?
The case for fixing now is straightforward: you lock in a known payment and remove the risk that rates move against you before 18 June or beyond. Swap rates — which drive fixed mortgage pricing — are still volatile and could reprice quickly if Middle East tensions re-escalate or if UK inflation data surprises to the upside in April or May.
The case for waiting is that lenders are currently in a period of gradual trimming. If that continues, the best-buy 2-year rate may fall from 4.45% to 4.2–4.3% by summer. On a £200,000 mortgage over 25 years, that difference is roughly £25/month — worth having, but not worth significant uncertainty.
The practical middle ground: Reserve a rate now — most lenders allow you to lock in an offer up to 6 months ahead at no cost. If rates fall materially before your deal completes, your broker can switch you to the better rate. You get the security of a reservation without sacrificing the upside of a further fall.
The remortgage wave — 2021 five-year fixes expiring now
Homeowners who took out a 5-year fix in 2021 are hitting the end of their deal this year. Average 5-year rates in 2021 were around 2.5–2.6%. At today's average of 5.70%, monthly payments on a £250,000 mortgage over 20 years increase from around £1,325 to roughly £1,760 — a jump of £435/month. This is the most significant mortgage cost shock for households since the 2022–23 rate cycle.
The most important action is not to drift onto the SVR. For a £250,000 balance, the difference between a 5.70% 5-year fix and a typical 8% SVR is over £350/month — more than £4,200 per year. Even in the worst-case scenario of rates rising, a fixed deal beats the SVR by a substantial margin.
What to do based on your situation
Fix ending in the next 3 months: Act now. Reserve a rate — this costs nothing and you can switch to a better deal before completion if rates fall further.
Fix ending in 3–6 months: Start conversations with a broker now. The reservation window is there for exactly this situation.
Currently on an SVR: Move immediately. There is no scenario in which staying on an 8% SVR makes financial sense versus a competitive fixed deal.
Mid-fix with 12+ months left: Check your ERC and run the Remortgage Savings Calculator. Early exit is rarely worthwhile unless you are moving home.
Buying your first home: Model affordability at today's rates, not January rates. Use the FTB Affordability Calculator to get an accurate borrowing estimate.
BritSavvy note: This article is for information only. We are not authorised mortgage advisers. The right decision for your mortgage depends on your personal financial position, term remaining, and risk tolerance. A whole-of-market broker will give you regulated advice — many charge nothing (paid by the lender) or a flat fee of £300–£500.
Why are mortgage rates falling when the base rate is unchanged?
Fixed mortgage rates are driven by swap rates, not the Bank of England base rate directly. Swap rates reflect the market's expectation of future interest rates and can move quickly with global events. After the March spike — driven by Middle East energy market disruption — swap rates have partially retreated as markets reassessed the situation. Lenders responded by cutting fixed rates, even though the base rate remained at 3.75%.
Is now a good time to fix for 2 or 5 years?
Average 2-year and 5-year rates are currently similar — 5.81% and 5.70% respectively. At best-buy level, the gap is also narrow: 4.45% for 2-year versus 4.73% for 5-year at 60% LTV. The case for a 5-year fix is certainty for longer at a time when the outlook remains uncertain. The case for a 2-year fix is that if inflation falls and the BoE cuts through 2027, you will remortgage into a better rate in two years. Given the similarity in rates, the choice is more about how long you want to be locked in than a pure rate calculation.
Should I overpay my mortgage at current rates?
At 4.5–5%+ mortgage rates, overpaying delivers a guaranteed, risk-free return equal to your rate. The best easy access savings accounts currently pay around 4.5–4.75% (with bonus), so the two are broadly comparable — meaning overpaying and saving offer similar financial outcomes. If your mortgage rate is above your after-tax savings rate, overpaying wins. Check your annual 10% ERC-free overpayment allowance first. Use the Overpay vs Invest calculator to model your specific numbers.