Will mortgage rates go down in 2026 UK?

Most forecasters expect mortgage rates to fall gradually through 2026, but not dramatically. The Bank of England base rate is expected to drop from its current level in small steps of 0.25% at a time. Average 2-year fixed rates may settle around 3.5%–4.0% by late 2026, and 5-year fixes around 3.5%–3.8%. However, rates are unlikely to return to the sub-2% levels seen in 2021.

What is a good mortgage rate in 2026?

In early 2026, a competitive rate would be around 3.8%–4.2% for a 2-year fix and 3.7%–4.0% for a 5-year fix, assuming a 75% LTV or lower. Higher LTV products (90%+) will carry higher rates. Your individual rate depends on your deposit size, credit score, income, and the property type.

Should I fix my mortgage in 2026?

Most borrowers benefit from fixing because it provides certainty. If rates are expected to fall, a shorter fix (2 years) lets you remortgage sooner at a potentially lower rate. If you value stability and predictability, a 5-year fix locks in your payments. Tracker mortgages offer the chance to benefit if the base rate drops, but carry the risk of payments rising if it doesn't.

Will mortgage rates ever go back to 2%?

Sub-2% mortgage rates were the product of extraordinary circumstances — a decade of near-zero interest rates following the 2008 financial crisis and pandemic-era emergency support. Most economists believe rates will not return to these levels in the foreseeable future. A more realistic 'new normal' is 3%–4.5% for fixed-rate mortgages.

Mortgage Rate Predictions 2026 UK — What to Expect and How to Prepare | PocketWise

Mortgage Rate Predictions 2026 UK — What to Expect and How to Prepare

Expert mortgage rate forecasts for 2026 and beyond. What's driving rates, when they might fall, and what you should do whether you're buying, remortgaging, or on a variable rate.

By PocketWise · 25 March 2026 · 5 min read

After the sharp rises of 2022–2023, mortgage rates have been gradually easing. Here is what the experts are predicting for the rest of 2026 and how to position yourself.

Current Mortgage Market Snapshot — March 2026

Measure	Current level
Bank of England base rate	4.50%
Average 2-year fixed rate (75% LTV)	~4.1%
Average 5-year fixed rate (75% LTV)	~3.9%
Average SVR (standard variable rate)	~7.0%
Average tracker rate	Base rate + 0.5%–1.0%

Rates are indicative and change frequently. Check current best-buy tables before making decisions.

Rate Forecast Timeline

Period	Base rate forecast	2-yr fix forecast	5-yr fix forecast
Q1 2026 (now)	4.50%	4.0%–4.3%	3.8%–4.1%
Q2 2026	4.25%–4.50%	3.8%–4.1%	3.7%–4.0%
Q3 2026	4.00%–4.25%	3.6%–4.0%	3.5%–3.9%
Q4 2026	3.75%–4.25%	3.5%–3.9%	3.5%–3.8%
2027	3.50%–4.00%	3.3%–3.8%	3.3%–3.7%

Key assumptions: Inflation continues to fall towards the 2% target, the economy grows modestly, and no major external shocks (global conflict escalation, energy crisis, financial instability).

What’s Driving Mortgage Rates?

Factor	Current direction	Impact on rates
Bank of England base rate	Expected to fall gradually	Directly lowers tracker rates; indirectly lowers fixed rates
Inflation (CPI)	Falling towards 2% target	Lower inflation = more room for rate cuts
Swap rates	2-year and 5-year swaps falling slowly	Fixed rates are priced off swap rates, not the base rate directly
Lender competition	Increasing — more lenders competing for business	Pushes rates lower as lenders undercut each other
Economic growth	Modest — not strong enough to push rates up	Neutral to slightly downward pressure
Global factors	Geopolitical uncertainty, US rates	Can push rates either way unexpectedly
Bond yields	Gradual decline	Lower yields = lower fixed mortgages over time

Why Fixed Rates Don’t Track the Base Rate Exactly

Fixed-rate mortgages are priced based on swap rates — the rate at which banks lend to each other for a fixed period. Swap rates reflect the market’s expectation of future base rates over the fix period. This is why:

5-year fixes are sometimes cheaper than 2-year fixes — the market expects rates to fall over 5 years
Fixed rates can fall before the base rate is actually cut — if markets anticipate cuts
Fixed rates can rise even if the base rate stays the same — if inflation data disappoints

What Should You Do?

If Your Fixed Rate Is Ending Soon

Months until your fix ends	Action
6+ months	Start looking now — most lenders let you lock in a rate up to 6 months before completion
3–6 months	Lock in the best available rate immediately
Already on SVR	Switch now — SVRs are typically 6.5%–7.5%, far above fixed rates

Critical: Lenders typically allow rate locks 6 months in advance. If rates fall further before your fix ends, you can usually switch to a better deal before completion at no cost. This gives you a free option.

If You’re Buying a Home

Decision	Guidance
Wait for rates to fall further?	Risky — house prices may rise, eating into any rate saving
Fix for 2 years or 5 years?	2-year if you believe rates will fall further; 5-year for certainty
Large deposit?	Aim for 25%+ to access the best rates (75% LTV)
Broker or direct?	Use a whole-of-market mortgage broker — they can access deals not available directly

If You’re Remortgaging

Action	Detail
Start early	Begin looking 6 months before your current deal ends
Compare like for like	Consider the total cost (rate + fees) not just the headline rate
Check your current lender’s retention offer	Product transfers are often quick and don’t need a new valuation
Consider overpaying	If your new rate is lower, maintain your old payment level to pay off the mortgage faster

Related: Remortgage Step-by-Step Guide

Fix Length — 2-Year vs 5-Year

Factor	2-year fix	5-year fix
Current typical rate	~4.1%	~3.9%
Flexibility	Remortgage sooner if rates fall	Locked in — certainty for longer
Risk	If rates don’t fall, you’re stuck at maturity	Less risk — you know your payments for 5 years
Best if	You believe rates will fall significantly in 2 years	You value stability and budgeting certainty
Early repayment charges	Typically 1%–3%	Typically 1%–5% (higher penalties for longer fixes)

Tracker vs Fixed

Factor	Tracker	Fixed
Rate moves with	Base rate	Locked at start
If base rate falls	Your payments fall immediately	No change until you remortgage
If base rate rises	Your payments rise immediately	No change — protected
Best if	You believe the base rate will fall and you can absorb risk	You want certainty and predictable monthly payments
Exit costs	Often no early repayment charges	Usually 1%–5% ERCs

Historical Context

Year	Bank of England base rate	Typical 2-yr fix	Typical 5-yr fix
2020	0.10%	1.5%–2.0%	1.5%–2.0%
2021	0.10%–0.25%	1.2%–1.8%	1.3%–1.8%
2022	0.25%–3.50%	2.0%–6.5%	2.0%–6.0%
2023	3.50%–5.25%	5.0%–6.5%	4.5%–6.0%
2024	5.00%–5.25%	4.2%–5.5%	4.0%–5.0%
2025	4.50%–4.75%	4.0%–4.8%	3.8%–4.5%
2026 (so far)	4.50%	3.9%–4.3%	3.7%–4.1%

The era of sub-2% mortgages (2009–2021) was exceptional. A return to 3.5%–4.5% is closer to the long-term historical average than the ultra-low rates many borrowers became used to.

How to Get the Best Rate

Tip	Impact
Use a whole-of-market mortgage broker	Access to 12,000+ products vs a few hundred at one lender
Increase your deposit above 75% LTV (or 60% LTV)	Each LTV band offers better rates
Improve your credit score before applying	Higher scores unlock better rates
Reduce outstanding debt	Improves your affordability assessment
Consider the total cost (rate + fees)	A low rate with £999 fee may cost more than a slightly higher rate with no fee
Lock in early	Most lenders let you reserve a rate 6 months out
Check product transfer rates	Your existing lender may offer a competitive switch

Monthly Payment Comparison

How a 0.5% rate difference affects payments on a £250,000 repayment mortgage over 25 years:

Rate	Monthly payment	Total interest over 25 years
3.5%	£1,252	£125,581
4.0%	£1,319	£145,737
4.5%	£1,390	£166,792
5.0%	£1,462	£188,710
5.5%	£1,536	£211,452
6.0%	£1,612	£234,978

A 0.5% difference on a £250,000 mortgage equals roughly £67/month or £20,000+ over 25 years.

Useful Links

Your home may be repossessed if you do not keep up repayments on your mortgage. PocketWise provides information and guidance — we do not offer financial advice. Seek independent mortgage advice before making decisions about borrowing.