Mortgage Rates Climb: Average 2-Year Fixed Hits 5.73% Amidst Stable Base Rate

The UK mortgage market has seen a significant shift, with the average two-year fixed mortgage rate jumping to 5.73% by May 28, 2026. This is a noticeable increase from 4.83% recorded at the beginning of March, according to Moneyfacts data.

What Changed and By How Much?

Despite the Bank of England's Monetary Policy Committee (MPC) holding the base rate steady at 3.75% in April 2026, mortgage lenders have been adjusting their offerings. The effective rate on all new mortgages did drop to 4.09% in January 2026, but the recent trend for fixed deals shows an upward movement.

For those looking for new deals, the lowest two-year fixed mortgage rate for homemovers is currently 4.40% from Nationwide Building Society, available up to 60% Loan-to-Value (LTV) with a £999 fee. First direct offers a competitive five-year fixed rate at 4.48% with a £490 fee.

UK Housing Market: Prices Stagnate, Rents Rise

The housing market tells a mixed story. Average UK house prices remained unchanged (0.0%) at £268,000 in the 12 months to March 2026, a slowdown from the 1.7% growth seen in February. England saw a slight decrease of 0.6% to £290,000, with London experiencing the lowest annual inflation, down 2.1%.

In contrast, Wales saw prices increase by 2.9% to £213,000, and Scotland by 1.6% to £187,000. Northern Ireland recorded a more substantial increase of 7.4% to £198,000 in Q1 2025.

For renters, the picture is different. Average UK monthly private rents increased by 3.5% to £1,381 in the 12 months to April 2026. England's average rent rose to £1,438 (3.5%), Wales to £834 (4.9%), and Scotland to £1,019 (2.0%). London continues to have the highest average rent at £2,290, despite its annual inflation being the lowest in England at 2.0%.

Scenario: Remortgaging in the Current Climate

Imagine you're a homeowner with a £200,000 mortgage coming to the end of a two-year fixed deal that was set at 2.5% in 2024. Your current monthly payment might be around £897 (based on a 25-year term). If you now need to remortgage onto the average two-year fixed rate of 5.73%, your new monthly payment could jump to approximately £1,260. That's an increase of over £360 a month, a significant hit to household budgets.

What this means for you

If you're a homeowner on a variable rate or nearing the end of a fixed term, you'll be feeling the pinch of rising mortgage rates. For first-time buyers, the stable house prices might seem like a small silver lining, but the higher borrowing costs could still make homeownership a stretch. Renters are facing continued increases, putting pressure on their monthly outgoings and making saving for a deposit even harder.

Step-by-Step: What to Do Right Now

1. Review Your Mortgage: If your fixed deal is ending in the next six months, start looking at new rates now. Many lenders will allow you to lock in a new rate in advance.
2. Speak to a Mortgage Broker: An independent mortgage adviser can help you navigate the market and find the best deals for your circumstances, including those not widely advertised.
3. Assess Your Savings: For first-time buyers, consider a Lifetime ISA (LISA). You can save up to £4,000 a year and get a 25% government bonus, meaning £1,000 free from the government annually. For other savings, a Cash ISA offers tax-free interest, and remember your Personal Savings Allowance means you can earn a certain amount of interest tax-free each year.
4. Check Your Budget: With potential increases in mortgage payments or rent, it's crucial to review your household budget and identify areas where you can save.

When Effective and Where to Get Help

The mortgage rates mentioned are as of May 27-28, 2026, and house price and rental data are primarily for March-April 2026. The Bank of England's next base rate review is scheduled for Thursday, June 18, 2026, which could influence future mortgage rates.

For personalised advice, contact an independent mortgage adviser. You can also find official data and guidance from the Office for National Statistics (ONS) and HM Land Registry.

But there are risks

While the Bank of England has held its base rate steady, the increase in average fixed mortgage rates shows that lenders are reacting to broader market conditions and future expectations, not just the current base rate. This could mean further volatility in mortgage products, even if the base rate remains unchanged in the short term. Savings rates can also be variable and may include introductory bonuses that expire, so always check the terms and conditions.

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.

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