The Bank of England's Monetary Policy Committee (MPC) held the base rate at 3.75% at its meeting ending April 29, 2026. This marks the second consecutive hold and the third meeting in a row without a cut since the rate fell to 3.75% in December 2025. This decision has a direct impact on the mortgage market, with average fixed rates seeing some movement throughout May.
What changed and by how much?
While the base rate remained steady, the mortgage market has seen some shifts. As of May 29, 2026, the average 2-year fixed mortgage rate stood at 5.69%, according to Moneyfacts. Rightmove reported a slightly lower average of 5.13% for the same product. For those looking for longer-term stability, the average 5-year fixed mortgage rate was 5.64% (Moneyfacts) or 5.15% (Rightmove) on the same date. Interestingly, the average 5-year fixed rate is currently slightly lower than the average 2-year fixed rate, suggesting market expectations of lower interest rates further down the line.
For homeowners on variable rates, the average Standard Variable Rate (SVR) was 7.13% as of May 1, 2026. The average 2-year variable rate was 4.55% by May 29, 2026.
House Prices Stagnate, Rents Continue to Rise
The property market tells a mixed story. Average UK house prices remained unchanged (0.0%) in the 12 months to March 2026, settling at a provisional £268,000, according to the ONS. This is the lowest annual inflation rate since April 2024. England saw a slight dip, with prices down 0.6% to £290,000. London experienced the most significant fall, with prices decreasing by 2.1% to £542,000, marking eight consecutive months of annual falls. In contrast, Wales saw prices rise by 2.9% to £213,000, and Scotland by 1.6% to £187,000.
Meanwhile, the rental market continues its upward trend. Average UK monthly private rents increased by 3.5% to £1,381 in the 12 months to April 2026 (ONS provisional estimate). England's average rent hit £1,438, up 3.5%, while Wales saw a 4.9% increase to £834. Scotland's rents rose by 2.0% to £1,019.
Scenario: What this means for you
If you're a homeowner with a £200,000 mortgage coming to the end of a 2-year fixed deal at 3.5%, moving to an average 5-year fixed rate of 5.64% could see your monthly repayments increase significantly. For example, on a 25-year term, your payments could jump from around £1,002 to £1,235 – an extra £233 per month. If you're a first-time buyer saving for a deposit, the stagnant house prices in some areas, particularly London, might offer a glimmer of hope, but rising rents could make saving harder.
Step-by-step what to do right now
- Check your current deal: If your fixed-rate mortgage is ending in the next six months, start looking at new deals now. Many lenders will allow you to lock in a rate in advance.
- Speak to a mortgage broker: An independent mortgage adviser can compare deals from across the market, including those not directly available to the public, and help you understand the small print.
- Consider your options: Think about whether a 2-year or 5-year fixed deal is right for you, given the current market. Variable rates are lower but carry more risk if the base rate rises.
- Review your savings: If you're a first-time buyer, ensure you're making the most of a Lifetime ISA (LISA) – you can contribute up to £4,000 a year and get a 25% government bonus, meaning £1,000 free from the government annually. For general savings, consider a Cash ISA for tax-free interest, remembering your Personal Savings Allowance. Always check if a savings rate is variable or includes a temporary bonus that may expire.
But there are risks
"Given the context of softness in the real economy and uncertainty around the scale and duration of the shock, tolerating temporarily above-target inflation to provide some support for the real economy is an appropriate way to approach the trade-off [between inflation and activity]. But that tolerance would weaken if signs of second-round effects begin to emerge."
— Andrew Bailey, Governor of the Bank of England (May 29, 2026)
While the base rate has been held, the Bank of England's Governor, Andrew Bailey, has indicated that their tolerance for above-target inflation could lessen if 'second-round effects' emerge. This means future rate cuts aren't guaranteed, and rates could even rise if inflation pressures persist. The market is still volatile, and mortgage rates can change daily.
When effective
The Bank of England's decision to hold the base rate at 3.75% was effective from April 29, 2026. Mortgage rates, however, are dynamic and can be updated by lenders daily. The next MPC decision is scheduled for Thursday, June 18, 2026.
Where to get help
For personalised advice, it's always recommended to speak with an independent mortgage adviser or a financial planner. They can assess your individual circumstances and help you navigate the current market.
Sources
- Bank of England — Monetary Policy Committee meeting minutes, April 30, 2026
- Bank of England — Governor Andrew Bailey statement, May 29, 2026
- Moneyfacts — Average mortgage rates data, May 1 & May 29, 2026
- Rightmove — Average mortgage rates data, May 29, 2026
- Office for National Statistics (ONS) — UK House Price Index, March 2026
- Office for National Statistics (ONS) — UK Private Rents, April 2026
- HMRC — UK Property Transactions, April 2026
This is not financial advice. Seek independent mortgage guidance. Savings rates shown may be variable and include introductory bonuses. Interest may be taxable above your Personal Savings Allowance.