Borrowers are facing fresh uncertainty as mortgage rates are set to change again, but a freeze in the Bank of England’s base rate should not stop them securing a deal, according to analysis. Moneyfactscompare.co.uk.
Recent weeks have seen a number of major lenders – including barclays, HSBC, lloyds bank, natwest And santander – Cut selected fixed mortgage rates in response to swap rate movements, although it is unclear whether further cuts will occur.
Earlier expectations that interest rates would remain high for longer had prompted lenders to raise mortgage pricing, with average rates recording their sharpest monthly increase since July 2023. Bank of England While the base rate has declined over the past year, it has not had a full impact on borrower costs, leaving many customers wondering when to make the move.
Rachel Springall, finance commentator at Moneyfactscompare.co.uk, said: “Borrowers have been left in limbo as it is difficult to know whether they should rush into a fixed deal or wait and see if lenders make more substantial cuts. Unfortunately, the outlook on interest rates remains uncertain, so holders of cheaper fixed rate mortgages will have to make higher repayments this year, which will be incredibly disappointing. It is still an expensive It is worth moving away from the Revert rate, as borrowers can save around £2,500 per year* by moving to a fixed rate deal.
“The Bank of England refuses to rush into any decisions, and with recession fears already looming, it seems stagflation has ruled out any plans for a cut this year. Economists expect the BOE base rate to remain on hold in the short term, and it looks unlikely we will see a cut until 2027. Borrowers will be hoping that the mortgage devastation experienced in recent weeks will calm down, however. Revaluations amid swap rate moves could go both ways. The mortgage rate hikes have been fueled by conflict in the Middle East, where disruptions to supply chains have created muddy waters for the future path of inflation and interest rate determinations.
“The increasing pressure on households is likely to echo the shock experienced by the UK during the summer of 2023, so the biggest concern for consumers will be how long they have to endure this, especially for those looking to buy a home or a mortgage, as mortgage rates have risen significantly in the short term.”
| mortgage market analysis | ||||||
| average mortgage rates | April-21 | April-24 | April-25 | March-26 | April-26 | 24-April-26 |
| Standard Variable Rate (SVR) | 4.41% | 8.18% | 7.60% | 7.13% | 7.13% | 7.13% |
| two year fixed mortgage | 2.58% | 5.80% | 5.32% | 4.84% | 5.84% | 5.81% |
| five year fixed mortgage | 2.77% | 5.39% | 5.18% | 4.96% | 5.75% | 5.70% |
| 10-year fixed mortgage | 2.93% | 5.77% | 5.63% | 5.61% | 6.01% | 6.14% |
| Average rates shown are as of the first available day of the month, unless otherwise stated. Source: Moneyfactscompare.co.uk |
||||||
| Moneyfacts average mortgage rate | ||||||
| April-21 | April-24 | April-25 | March-26 | April-26 | 24-April-26 | |
| moneyfacts average mortgage rate |
2.68% | 5.65% | 5.28% | 4.90% | 5.72% | 5.68% |
| Calculated by summing all on-sale, core market, fixed and variable tracker mortgages. Standard exclusions apply: self-build only, shared ownership only, new build only, shared equity only, standard variable rates and adverse credit. | ||||||
| Source: MoneyFacts Average mortgage rates. | ||||||
MoneyFacts The average mortgage rate increased by 0.82% month-on-month (1 March vs 1 April), the largest monthly increase since July 2023 after 0.83% (1 June vs 1 July). While the jump in rates looks on the surface similar to the shocks felt in the summer of 2023, and let’s not forget the mini-budget in 2022, they have very different driving forces.
Lenders will be watching the Monetary Policy Committee (MPC) decision very closely, as it would be unwise to price deals too low in the short term, so they will react if swap rates start rising significantly again.
Springall continued: “At the end of February, before the unrest in the Middle East began, the biggest banks (Barclays, HSBC, Lloyds Bank, NatWest and Santander) had their two-year fixed mortgages priced around 0.30% above the two-year swap rate of 3.33%, but there were also expectations of a higher BOE base rate cut at that time. That’s why borrowers had a choice to choose from. There was a good pool of sub-4% fixed deals available. Base rate tracker mortgages currently look attractive but could be a gamble if interest rates rise this year, so it would be wise to choose a deal with no early repayment fee.
“Lenders will look to reprice to catch higher swap rates in the coming days, but even to compete for new business, it is all at the margins. Until the market sees greater stability, there is little scope for lenders to drop rates significantly given the prolonged unrest in the Middle East. Any borrower concerned about securing a mortgage would be wise to seek advice from a broker to navigate the mortgage maze. Will happen.”