Should I fix for 2 years or 5 years?

It depends on your circumstances and view on interest rates. A 2-year fix offers lower initial rates but you face remortgaging costs sooner and rate uncertainty. A 5-year fix provides longer-term certainty and may suit buyers who value predictability, even though the initial rate is typically higher. If you plan to move within 2-3 years, a 2-year fix avoids early repayment charges. If you want stability, a 5-year fix locks in your payment for longer.

What is the Bank of England base rate and why does it matter?

The Bank of England base rate is the interest rate the BoE charges banks for overnight lending. It directly affects tracker mortgages and standard variable rates, and indirectly influences fixed-rate pricing through swap rates. When the base rate falls, tracker mortgage payments reduce automatically. Fixed rates may also drop, though they are priced based on market expectations of future rates rather than the current base rate alone.

Can I switch my mortgage to a better rate?

Yes, this is called remortgaging. You can switch to a new deal when your current fixed or introductory period ends, or sometimes during it - though early repayment charges (ERCs) may apply. ERCs typically range from 1% to 5% of the outstanding balance and decrease each year of the fixed period. It is worth calculating whether the savings from a lower rate outweigh any ERCs and arrangement fees.

What mortgage rate can I get with a 10% deposit?

Rates at 90% loan-to-value (LTV) are typically 0.3-0.7 percentage points higher than rates at 60% LTV. The biggest rate improvement comes when you move from 90% to 85% LTV, and again from 80% to 75%. Saving a larger deposit not only reduces your rate but also lowers your monthly payments and total interest paid. Some lenders do not offer their best products above 85% LTV.

Are mortgage rates expected to fall in 2026?

Market expectations suggest the Bank of England will continue a gradual easing cycle through 2026, which should put downward pressure on mortgage rates. However, fixed rates are priced based on swap rates - which reflect market expectations of future base rate movements - so much of the anticipated easing may already be factored into current pricing. Geopolitical events, inflation data and gilt market movements can all cause rates to shift unexpectedly.

UK Mortgage Rates 2026: Fixed, Variable & Tracker Rates Explained

Bank of England base rate

The Bank of England (BoE) base rate is the single most important reference point for UK mortgage pricing. As of early 2026, the base rate sits at 4.50% following a cycle of increases that began in December 2021 when the rate was 0.1%. The BoE raised rates 14 times to a peak of 5.25% in August 2023, then began cutting in August 2024.

The base rate directly determines what tracker mortgage holders pay and heavily influences standard variable rates (SVRs). Fixed-rate mortgages are priced off swap rates - financial instruments that reflect where the market expects the base rate to be over the fixed period - rather than the current base rate itself.

The Monetary Policy Committee (MPC) meets eight times a year to set the base rate, with decisions announced at midday on the Thursday following their meeting. Each decision considers inflation data, employment figures, GDP growth and global economic conditions.

Fixed rate mortgages

A fixed rate mortgage locks in your interest rate for a set period, typically 2 or 5 years but sometimes 10 years or longer. Your monthly payment stays the same regardless of what happens to the base rate during the fixed period. Around 75% of UK mortgage borrowers choose a fixed rate product.

The trade-off is that you cannot benefit from rate falls during the fixed period without paying early repayment charges (ERCs). When the fixed period ends, you automatically move to your lender's standard variable rate (SVR), which is almost always significantly higher. This is why most borrowers remortgage to a new deal before or when their fixed period expires.

2-year fixed rates

Two-year fixes are the most popular mortgage product in the UK. They typically offer the lowest initial rates because the lender is committing to a fixed price for a shorter period. As of early 2026, competitive 2-year fixed rates start from around 4.0-4.3% for borrowers with a 40% deposit (60% LTV), rising to 4.5-5.0% at 90% LTV.

The disadvantage is frequency of remortgaging. Every two years you face arrangement fees (typically £500-£1,500), valuation costs and the risk that rates have moved against you. For a borrower taking a £200,000 mortgage, arrangement fees of £1,000 every two years add approximately 0.10% to the effective annual cost.

5-year fixed rates

Five-year fixes have grown in popularity since the rate volatility of 2022-23, when borrowers on short-term fixes faced large payment increases at remortgage. Five-year rates in early 2026 range from approximately 4.1-4.5% at 60% LTV to 4.6-5.2% at 90% LTV.

The premium over 2-year rates is currently narrow - often just 0.1-0.3 percentage points - which makes 5-year fixes attractive for borrowers who value certainty. Over a 5-year period, you save on arrangement fees (one set instead of two or three) and remove the risk of rate rises during the period.

Variable rate mortgages

Variable rate mortgages come in two main forms: standard variable rates (SVRs) and discounted variable rates. An SVR is each lender's default rate, set at their discretion. SVRs in early 2026 range from approximately 6.5% to 8.5% - significantly higher than fixed rates. Very few borrowers actively choose to be on an SVR; most end up there when a fixed deal expires without remortgaging.

Discounted variable rates offer a set reduction below the lender's SVR for a defined period. For example, "SVR minus 1.5% for 2 years." The risk is that the lender can change their SVR at any time, so your discount applies to a moving target. These products suit borrowers who want flexibility without ERCs but can tolerate payment uncertainty.

Tracker mortgages

Tracker mortgages follow the Bank of England base rate by a set margin. A typical tracker might be priced at "base rate + 0.75%", meaning your rate would currently be 5.25% (4.50% + 0.75%). When the BoE cuts the base rate, your payment falls automatically. When it rises, your payment increases.

Trackers are transparent and predictable in their relationship to the base rate, unlike SVRs which the lender can adjust independently. They can be excellent value in a falling rate environment. The risk is obvious: if the base rate rises, so does your payment, with no ceiling on the increase unless your product includes a cap (which is rare and expensive).

Lifetime trackers run for the entire mortgage term with no ERC, offering maximum flexibility. Term trackers run for a set period (e.g., 2 or 5 years) and may have ERCs during that period.

How rates affect affordability

The relationship between mortgage rates and monthly payments is not linear. On a £250,000 repayment mortgage over 25 years:

Rate	Monthly payment	Total interest
3.5%	£1,252	£125,600
4.0%	£1,319	£145,700
4.5%	£1,390	£167,000
5.0%	£1,461	£188,300
5.5%	£1,536	£210,800

The difference between a 3.5% and 5.5% rate on a £250,000 mortgage is £284 per month - or £85,200 over the full 25-year term. This is why even small rate movements matter, and why securing the best available rate through a broker or careful comparison can save tens of thousands of pounds.

Lenders stress-test your affordability at rates significantly above the product rate - typically the higher of the SVR or the product rate plus 3 percentage points. This means you may not be able to borrow as much as you expect even if headline rates look affordable.

Rate predictions for 2026-27

Interest rate forecasting is inherently uncertain, but market pricing and economist consensus suggest the Bank of England will continue cutting the base rate through 2026, potentially reaching 3.75-4.00% by the end of the year. Swap rates - which drive fixed mortgage pricing - are already reflecting some of this expected easing.

The key risk to this outlook is inflation. If UK inflation proves stickier than expected - due to energy prices, wage growth or global supply chain disruption - the BoE may slow or pause its cutting cycle. Conversely, a weaker-than-expected economy could accelerate cuts.

For borrowers, the practical implication is that waiting for lower rates is a gamble. If you find a competitive rate now that works for your budget, locking it in provides certainty. If rates fall further, you can remortgage at the end of your fixed period.

Choosing the right mortgage type

The right mortgage depends on your personal circumstances, risk tolerance and view on interest rates:

Fixed rates suit buyers who need certainty in their monthly budget and want protection from rate rises. Choose a 2-year fix if you expect rates to fall and want to remortgage sooner, or a 5-year fix for longer-term stability.
Tracker mortgages suit buyers who believe rates will fall and want to benefit immediately from BoE cuts. They also suit borrowers who may want to make overpayments or repay early without ERCs (on lifetime trackers).
Variable rates rarely make sense as an active choice. If you find yourself on an SVR, remortgaging to a fixed or tracker deal will almost certainly save money.

Using a mortgage broker can help you navigate the market. Brokers have access to products not available directly to consumers, and a good broker will compare deals across the whole market rather than just one lender's range. Many brokers charge no fee, instead earning commission from the lender.