For the first time in months, average mortgage rates across the UK have seen a notable drop, with major lenders including Santander and Halifax leading the charge. This shift offers a glimmer of hope for homeowners and first-time buyers grappling with high borrowing costs.
What changed and by how much?
According to Moneyfacts data as of May 27, 2026, the average rate across all mortgage types has fallen to 5.63%, down from 5.69% last month. This marks the first significant dip in average rates since the period following the Iran war, as reported by Mortgage Strategy.
Specifically, the average 2-year fixed rate is now 5.73%, a reduction from 5.81% in April. For those looking for longer-term security, the average 5-year fixed rate has also decreased to 5.66% from 5.71%. Even variable rates have seen a slight easing, with the average 2-year variable rate now at 4.55%, down from 4.61%.
This movement comes after the Bank of England's Monetary Policy Committee (MPC) held the base rate steady at 3.75% in April 2026, a level maintained since December 2025. Inflation, measured by the Consumer Price Index (CPI), stood at 2.8% in the year to April 2026, edging closer to the government's 2% target.
What this means for you
If you're a homeowner looking to remortgage:
Let’s say you’re on an average Standard Variable Rate (SVR), which currently stands at 7.13% as of May 1, 2026. If your fixed deal ended recently, moving to a new 2-year fixed rate at 5.73% could significantly reduce your monthly payments. For example, on a £200,000 mortgage over 25 years, moving from an SVR to the average 2-year fixed rate could save you hundreds of pounds a month. It’s crucial to compare deals and factor in any product fees.
Net mortgage approvals for house purchases rose to 63,531 in March 2026, the highest since November 2025, suggesting more people are actively engaging with the market.
If you're a first-time buyer:
While rates are still higher than a few years ago, any drop improves affordability. A lower fixed rate means your monthly repayments will be more manageable, potentially allowing you to borrow more or make your budget stretch further. This could be the nudge some aspiring homeowners need to step onto the property ladder.
When saving for a deposit, consider a Lifetime ISA (LISA) if you're under 40. You can contribute up to £4,000 each tax year and the government adds a 25% bonus, meaning you could get £1,000 free every year. For other tax-free savings, a Cash ISA is a good option, and remember your Personal Savings Allowance means most people can earn some interest tax-free outside of an ISA.
But there are risks
While mortgage rates are easing, the property market itself presents a mixed picture. The ONS and HM Land Registry reported that average UK house prices remained unchanged at 0.0% in the 12 months to March 2026, with an average value of £268,000. In England, prices fell by 0.6%, and London saw a 2.1% fall.
However, other indicators show modest growth. Nationwide Building Society reported house prices rising by 3.0% annually in April 2026 to an average of £278,880. Rightmove noted a 1.2% monthly rise in asking prices in May 2026, though with a national annual fall of 0.3% and clear regional differences.
This mixed outlook, as Forbes noted, suggests a cautious market. The question remains how long these lower rates will last, especially if inflation proves stickier than anticipated or global events shift. Savings rates shown may be variable and include introductory bonuses that could expire.
What to do right now
- Check your current deal: If you're on an SVR or your fixed term is ending soon, understand your current rate and potential new options.
- Speak to a mortgage broker: They have access to a wide range of deals, including those not directly advertised, and can help you navigate the market.
- Review your savings: If you're saving for a deposit, ensure you're making the most of tax-efficient accounts like a LISA or Cash ISA. Always check if a savings rate is variable or includes a temporary bonus.
- Get a Decision in Principle (DIP): This will give you a clear idea of how much you could borrow, making you a more attractive buyer.
When effective
The rate changes from lenders like Santander and Halifax are effective immediately, and the average rate figures from Moneyfacts are current as of May 27, 2026. This means new deals are available now for those looking to secure a mortgage or remortgage.
Where to get help
For personalised advice, a qualified independent mortgage adviser is your best port of call. They can assess your individual circumstances and recommend the most suitable products. You can also contact lenders directly, but a broker offers a broader market view.
Sources
- Bank of England — Monetary Policy Committee decisions, April 2026
- Moneyfacts — Average Mortgage Rates, May 27, 2026
- Office for National Statistics (ONS) / HM Land Registry — UK House Price Index, March 2026
- Nationwide Building Society — House Price Index, April 2026
- Rightmove — House Price Index, May 2026
- Mortgage Strategy — Average rates fall for first time since Iran war
- Forbes — Mixed Outlook For Mortgages In Cautious Market
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.