UK mortgage rates have climbed to their highest level in a month, with the average two-year fixed deal now standing at 5.59%. This marks a significant shift after rates had seen a brief dip earlier in July, impacting homeowners and prospective buyers across the country.
What Changed and By How Much?
As of July 24, 2026, the average two-year fixed mortgage rate has risen to 5.59%, up from 5.46% just two weeks prior. This is the highest we've seen for this type of deal since June 19. Similarly, the average five-year fixed rate now stands at 5.61%, an increase from 5.48% a fortnight ago, making it the highest since June 7.
The average rate across all mortgage types has also edged up to 5.54%, compared to 5.52% a month ago. For those on variable rates, the average two-year variable rate is now 4.51%, up from 4.48% last month, while the Standard Variable Rate (SVR) remains high at 7.13%.
This upward movement reverses a trend seen earlier in July, when Moneyfacts' UK Mortgage Trends Treasury Report noted that average two- and five-year fixed rates had fallen to 5.52%, their lowest since early March 2026. For context, at the start of the Iran war on March 1, 2026, a two-year average fix was 4.84% and a five-year deal was 4.96%.
Why Are Rates Rising Now?
Despite consumer price index (CPI) inflation falling to 2.6% in June 2026 – closer to the government's 2% target – mortgage rates are still on the climb. The Bank of England's Monetary Policy Committee (MPC) held interest rates at 3.75% in June, with their next decision due on July 30, 2026. The market often anticipates future moves, and lenders may be repricing their offerings based on expectations of the Bank's next steps or broader economic outlook.
Scenario: What This Means For Your Wallet
For Homeowners Nearing Remortgage:
Let's say you're a homeowner with an outstanding mortgage of £200,000 on a 25-year term, and your current fixed rate of 3% is about to expire. Moving to the average two-year fixed rate of 5.59% would significantly increase your monthly repayments.
- Old Monthly Payment (3%): Approximately £948
- New Monthly Payment (5.59%): Approximately £1,230
That's an increase of around £282 per month, or £3,384 per year. This highlights the importance of planning ahead and exploring your options.
For First-Time Buyers:
If you're looking to buy your first home, the average UK house price was £271,000 in May 2026. Securing a mortgage at these higher rates means your monthly repayments will be more expensive. For a £200,000 mortgage at 5.59% over 25 years, your monthly payment would be around £1,230.
Saving for a deposit is more crucial than ever. For first-time buyers, a Lifetime ISA (LISA) is a powerful tool. You can contribute up to £4,000 each year and get a 25% government bonus, meaning a free £1,000 if you max out your contributions. For other tax-free savings, a Cash ISA can be useful, and remember your Personal Savings Allowance, which allows basic rate taxpayers to earn £1,000 in interest tax-free each year (higher rate taxpayers £500).
Always check if a savings rate is variable or includes a temporary bonus that may expire, as this affects your long-term returns.
What This Means for You
If you're a homeowner on a variable rate or approaching the end of a fixed-rate deal, these rising rates mean higher monthly costs are likely. For first-time buyers, affordability challenges are increasing, making deposit saving and careful budgeting even more critical.
Step-by-Step: What To Do Right Now
- Review Your Mortgage: If you're on an SVR (currently 7.13%) or a variable rate, speak to a mortgage adviser to see if a fixed deal could save you money, even with current rates.
- Check Your Fixed Deal End Date: If your fixed rate is ending in the next 6-9 months, start exploring remortgage options now. Many lenders will offer a rate that can be locked in for a period, giving you peace of mind.
- Boost Your Savings: For first-time buyers, maximise your LISA contributions to benefit from the government bonus. For all savers, ensure you're utilising Cash ISAs and your Personal Savings Allowance to keep more of your interest.
- Budget Carefully: With potential increases in mortgage payments, review your household budget to identify areas where you can save or cut back.
- Seek Expert Advice: A qualified mortgage broker can assess your individual circumstances and help you navigate the complex market to find the best deal available.
The Other Side: Rental Market and House Prices
It's not just homeowners feeling the pinch. The rental market continues to see increases, with average UK monthly private rents rising by 3.3% to £1,388 in the 12 months to June 2026, according to the ONS. The number of homes available to rent is also 1% lower than a year ago, meaning less choice for renters.
Meanwhile, the housing market is showing signs of cooling. Average UK house prices increased by 2.7% in the 12 months to May 2026, a slowdown from 3.9% in April. The average UK house price was £271,000 in May. Mortgage approvals for house purchases decreased to 56,200 in May 2026, their lowest level in two and a half years, suggesting buyer activity is slowing.
When Effective
These latest rate increases are effective immediately for new mortgage deals. The Bank of England's next interest rate decision is due on July 30, 2026, which could influence future mortgage rate movements.
Where to Get Help
For personalised advice, consider speaking to an independent mortgage adviser or a financial planner. Organisations like Citizens Advice can also offer guidance on managing your finances.
Sources
- Moneyfacts – UK Mortgage Trends Treasury Report (July 2026)
- Office for National Statistics (ONS) – UK House Price Index (May 2026)
- Office for National Statistics (ONS) – UK Private Rent and House Price Index (June 2026)
- Bank of England – Monetary Policy Committee decisions (June 2026)