The honest answer is that the outlook is genuinely uncertain. The base rate is 3.75% — down significantly from its 5.25% peak — but average mortgage rates have risen sharply in 2026 from early-year lows as markets priced in potential further base rate rises driven by Middle East energy prices pushing inflation to 3.3%. The best deals available today start from 4.40% on a two-year fix at low LTV — meaningfully below the 5.7% average. Whether rates fall further depends on whether inflation returns toward 2%. The June MPC meeting is the next key moment. If you are on SVR (~8%), the case for fixing immediately is strong regardless of direction.
How we got here — the base rate journey 2022 to 2026
Understanding where rates stand in May 2026 requires the context of what has happened since 2022. The Bank of England raised rates fourteen consecutive times from 0.1% in December 2021 to 5.25% by August 2023 to combat the worst inflation in four decades. After holding at 5.25% for seven consecutive meetings, cuts began in August 2024. Four cuts followed through to December 2025, bringing the rate to its current 3.75%.
| Date | Base rate | Key context | Typical 2yr fix |
|---|---|---|---|
| Dec 2021 | 0.25% | Post-Covid rate rise cycle begins | ~1.5% |
| Aug 2023 | 5.25% | Peak — 14th consecutive rise | ~6.3% |
| Aug 2024 | 5.00% | First cut since March 2020 | ~5.5% |
| Nov 2024 | 4.75% | Second cut of cycle | ~5.0% |
| Feb 2025 | 4.50% | Third cut | ~4.8% |
| Aug 2025 | 4.25% | Fourth cut | ~4.6% |
| Dec 2025 | 3.75% | Fifth cut — current rate | ~4.1% |
| Jan–Mar 2026 | 3.75% (held) | Middle East conflict raises energy prices; inflation rises to 3.3% | Rises from 4.1% → ~4.8% |
| May 2026 (now) | 3.75% (held) | 8-1 MPC vote to hold; one member wanted a rise | Best ~4.40%, avg ~5.73% |
Average 2-year fixed rate figures are approximate market averages. Best available rates at 60% LTV are significantly lower. Sources: Bank of England MPC minutes, HomeOwners Alliance, Which?, Uswitch, May 2026.
What is driving UK mortgage rates in 2026
UK mortgage rates in mid-2026 are being pulled in two directions simultaneously — which is precisely why the outlook is uncertain.
Forces pushing rates down
- Base rate already cut five times. The Bank of England has cut from 5.25% to 3.75% since August 2024. Each cut feeds through into tracker mortgage payments and provides some anchor for fixed rate pricing.
- Inflation fell below target in September 2024. The fundamental driver of the rate rise cycle — persistent above-target CPI — was resolved temporarily in late 2024, enabling the cut cycle to begin.
- Economic growth is subdued. A weak UK growth outlook reduces inflationary pressure and supports the case for lower rates over the medium term.
Forces pushing rates up
- Inflation back above target at 3.3%. CPI rose from below 2% in late 2024 back to 3.3% in March 2026, driven primarily by higher energy costs flowing from Middle East conflict. The Bank expects inflation to rise further in Q3 2026 as energy price increases feed through to the price cap.
- One MPC member already voting for a rise. At the April 2026 meeting, one of the nine MPC members voted to increase base rate to 4%. This dissent — even if a minority — signals that the committee is not uniformly dovish.
- Swap rates rose sharply in early 2026. Fixed mortgage rates are priced off swap rates, not just the base rate. As markets priced in the possibility of rate rises in response to energy inflation, swap rates jumped — and average 2-year fixed rates rose from approximately 4.83% in early March to 5.73% by late May. The best deals at low LTV remain meaningfully below the average, but the market direction has been upward in 2026.
- Global energy price uncertainty. The MPC has explicitly stated that the conflict in the Middle East creates material uncertainty around energy prices and hence inflation. Monetary policy cannot directly influence energy prices — but the Bank will respond to second-round inflation effects if they materialise.
Three scenarios for UK mortgage rates — rest of 2026
If energy prices stabilise and inflation returns toward 2%, the MPC resumes cutting. Base rate moves to 3.25–3.5% by year end. Fixed mortgage rates drift lower, with best 2-year deals returning to the 4.0–4.3% range seen in early 2026. This is the outcome borrowers hoping to wait for rates to fall are banking on.
Inflation remains sticky above target through H2 2026 but does not worsen significantly. The MPC holds at 3.75% for the remainder of the year. Fixed rates broadly plateau at current levels, with modest tightening and loosening around news events. Best deals remain available around 4.4–4.8% for low-LTV borrowers.
Middle East energy prices remain elevated through summer 2026, pushing CPI to 4%+. The MPC raises base rate once or twice before year end. Swap rates jump further, fixed rates rise to the 5.0–5.5% range for competitive deals and higher for average deals. Some expert forecasters consider one rise possible in H2 2026.
As of late May 2026, financial markets are not pricing in a rate rise at the 18 June MPC meeting — the consensus is a hold at 3.75%, consistent with the 8-1 vote at the April meeting. However, markets are pricing in meaningful probability of one rise later in 2026 if energy prices remain elevated. Most forecasters expect rates to end 2026 somewhere between 3.25% (if energy concerns ease) and 4.0% (if a hike is needed).
The wide range of outcomes reflects genuine uncertainty — the Middle East situation is the key variable that no forecaster can confidently resolve. Anyone telling you with certainty that rates will definitely fall or definitely rise in 2026 H2 does not have information the market lacks.
Best mortgage rates available right now — May 2026
Despite elevated average rates, competitive deals remain available — particularly for borrowers with large deposits at low LTV. The gap between the best deals and the average is significant and quantifies the value of using a whole-of-market broker.
| Product type | Best rate (May 2026) | LTV | Average rate | Gap: best vs average |
|---|---|---|---|---|
| 2-year fixed | ~4.40% | 60% | ~5.73% | 1.33pp below average |
| 2-year fixed | ~4.75% | 75% | ~5.60% | 0.85pp below average |
| 2-year fixed | ~5.10% | 90% | ~5.90% | 0.80pp below average |
| 5-year fixed | ~4.83% | 60% | ~5.66% | 0.83pp below average |
| 5-year fixed | ~5.10% | 75% | ~5.55% | 0.45pp below average |
| Tracker (base + margin) | ~4.60% | 60% | — | Falls if base rate cut; rises if raised |
| SVR (revert rate) | ~8.0% | Any | ~8.0% | 3.6–4.6pp above best fix — act immediately |
Rates are indicative as of late May 2026. Best rates require good credit, stable employment, and sufficient deposit. The best 2-year fix at 4.40% (Nationwide, 60% LTV, £999 fee) requires a 40% deposit. Always compare the full market via a whole-of-market broker. Sources: HomeOwners Alliance, L&C, Uswitch, May 2026.
What to do now — guidance for each borrower type
- SVR averages ~8% — you are paying 3.6–4.6pp above the best fixed deals
- On a £250k mortgage, fixing at 4.5% vs SVR at 8% saves approximately £677/month
- The direction of rates does not change this calculus — any fix saves significant money
- Contact a whole-of-market broker today — do not wait for further clarity on rates
- Most lenders allow you to lock in a new rate up to 6 months before your deal ends
- Lock in a competitive rate now — if rates fall before your deal starts, re-apply at the lower rate
- If rates rise further, you are protected by the rate already secured
- Compare product transfer (with current lender) versus remortgage across the full market
- Model your monthly payment at today's rate and at +1% to allow for further market movement
- At 4.4–5.7% available, budget at the rate you expect to be quoted (use the calculator)
- A 5-year fix locks in your payment for longer — reduces exposure to any further 2026 rises
- Do not borrow to the absolute maximum of affordability at current rates — leave headroom
- If your fix has more than 6 months to run, there is nothing to do right now
- Set a calendar reminder for 6 months before expiry to begin shopping
- Watch the June and August MPC decisions — they will set the direction for H2 2026
- Overpaying within your 10% annual allowance builds equity and reduces remortgage LTV
How fixed mortgage rates are set — and why base rate is not the whole story
A common misconception is that mortgage rates move directly with the Bank of England base rate. In practice, fixed mortgage rates are primarily priced off swap rates — the rate at which banks can borrow money for fixed periods (two years, five years) in wholesale financial markets. Swap rates reflect the market's expectation of where base rate will be over that future period, not just where it is today.
This is why fixed mortgage rates can rise even when the base rate is unchanged — and why they moved sharply higher in early 2026 without any actual base rate increase. Markets priced in the possibility of future base rate rises in response to energy inflation, and swap rates jumped. Lenders repriced their fixed rate products accordingly, pushing average 2-year fixed rates from 4.83% to 5.73% in approximately eight weeks — before the MPC had done anything at all.
The key variables to watch for fixed rate movements are therefore: UK gilt yields (particularly 2-year and 5-year), swap rate movements (reported by financial data providers), CPI inflation releases (monthly, ONS), and MPC meeting decisions and the accompanying minutes which reveal the vote split and forward guidance. A single MPC vote of 5-4 for a hold signals very different future direction than an 8-1 vote.
Frequently asked questions
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Will mortgage rates go down in 2026?As of May 2026, the outlook is genuinely uncertain. The Bank of England held the base rate at 3.75% at the April 2026 meeting, with inflation at 3.3% above the 2% target. Average two-year fixed rates rose from around 4.83% in early March to approximately 5.79% as markets priced in potential base rate rises driven by energy prices. Whether rates fall further depends primarily on whether the energy price pressure from the Middle East conflict subsides and inflation returns toward 2%. The next key decision is at the MPC meeting on 18 June 2026.
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What is the Bank of England base rate in 2026?The Bank of England MPC voted 8-1 to maintain base rate at 3.75% at its meeting ending 29 April 2026, with one member voting to raise to 4%. The previous change was the cut in December 2025 when base rate was reduced to 3.75%. The base rate has fallen from a peak of 5.25% in August 2023, cut five times over five MPC meetings to reach the current 3.75%.
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What are the best mortgage rates available in May 2026?The best rate on a 2-year fixed mortgage in May 2026 is approximately 4.40% from Nationwide at 60% LTV (fee £999). The average 2-year fixed rate at 60% LTV is 4.62% according to Rightmove. The overall average two-year fixed mortgage rate across all LTVs is 5.73%, while the average five-year fixed rate is 5.66%. The gap between the best deals and the average is significant — a whole-of-market broker can identify the most competitive product for your specific LTV and circumstances.
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Should I fix now or wait for rates to fall?If you are on SVR, fix immediately — the average SVR is just below 8%, which is significantly above the best available fixed rates. The direction of future rate movements does not change the case for fixing off SVR. If you are approaching the end of a current deal, lock in a rate now (most lenders allow this up to six months ahead) — if rates fall before your deal starts, you can re-apply at the lower rate, and if they rise you are protected. The June MPC meeting on 18 June will be informative for anyone with a deal expiring in H2 2026.
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Why did mortgage rates rise in 2026 if the base rate has been cut?Fixed mortgage rates are driven primarily by swap rates, not just the base rate. Swap rates — the financial benchmarks lenders use to price fixed-rate mortgages — rose as markets priced in potential future base rate increases driven by energy prices from the Middle East conflict. The MPC has not raised rates, but lenders repriced fixed products in anticipation of possible future rises. This explains why fixed rates can move independently of, and sometimes in the opposite direction to, actual base rate decisions.
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✓ Editorially reviewed — all Poqet guides are checked for factual accuracy before publication and updated when UK rates or legislation change. Editorial Policy