Mortgage Rate Cuts: Lenders Lower Fixed Deals as Base Rate Holds
Mortgage Rate Cuts: Lenders Lower Fixed Deals as Base Rate Holds
UK lenders are cutting fixed mortgage rates again, and the reason is not a move in the Bank of England base rate. Fixed pricing is set in the wholesale funding market, and that market has shifted in borrowers' favour over recent weeks. This update sets out which lenders have cut, where fixed rates now sit, and how to weigh fixing now against waiting for the next move.
To talk through how the latest cuts affect your remortgage or purchase timing, call 01202 155992 or contact Mortgage One.
Why are lenders cutting mortgage rates when the base rate held?
Lenders are cutting fixed rates because swap rates, the wholesale cost of funding fixed mortgages, have fallen, not because the base rate moved. The Bank of England held Bank Rate at 3.75% on 18 June 2026, yet easing energy prices after the Middle East ceasefire pulled swaps lower, giving lenders room to reprice fixed deals down.
Fixed-rate mortgages are priced from swap rates plus a lender margin, so they follow the market's view of where rates are heading rather than today's base rate. Swap rates have continued to ease over recent weeks following the ceasefire between the US and Iran, which pulled energy prices and inflation expectations back from their early-summer spike.
That funding move has reopened competition. After a spring in which the Middle East conflict pushed swaps up and stalled the cutting cycle, the better wholesale backdrop has let lenders trim fixed pricing again, even with the base rate unchanged. For where markets now see Bank Rate heading over the coming years, our UK interest rate projection sets out the forecast in detail.
Which lenders are cutting fixed mortgage rates now?
Nationwide is the biggest name to move, cutting fixed rates by up to 0.25 percentage points across its two, three, five and 10-year products for new and existing customers, taking its lowest fixed rate to 4.19%. HSBC UK, First Direct, Yorkshire Building Society, West Brom Building Society and Skipton Building Society have also cut in recent days.
Nationwide's reductions span its first-time buyer, home mover, remortgage and switcher ranges, with a new three-year fix for first-time buyers at a 25% deposit cut to 4.69%. The breadth of the move points to a lender competing for volume rather than chasing a single headline rate, which tends to push rivals to follow.
Where fixed mortgage rates sit after the cuts
Even after the cuts, the lowest fixed deals start at around 4.19%, with leading two-year fixes from about 4.30% and five-year fixes from about 4.33% at lower loan-to-value bands. Fixed rates have not yet dropped below 4%, although a small number of tracker deals sit just under, at around 3.96%.
Those headline rates assume a sizeable deposit, with the lowest pricing reserved for lower loan-to-value bands and rates stepping up as the deposit shrinks. Pricing also moves quickly in a repricing market, so a leading rate seen on a Tuesday may not lead by the end of the week.
For a fuller comparison of two-year and five-year fixed pricing at current levels, see our guide to current UK mortgage rates and how the terms differ. The wider gap to watch is the revert rate, because letting a fix lapse rolls a borrower onto the lender's standard variable rate, which is far higher than a new fixed deal.
Should you fix your mortgage rate now or wait?
With no guarantee that rates fall further, the practical approach for most borrowers is to secure a deal now and keep the option to move down. Most lenders let you reserve a new rate up to six months before your current deal ends, then switch to a lower rate if pricing improves before completion, which protects you either way.
The risk and reward is uneven. If swaps keep easing, you can usually switch down to the lower rate before completion at no cost. If they turn higher, as they did through the spring, the rate you secured holds. Waiting in the hope of a better number carries the opposite risk, because pricing can move within hours of an inflation figure or a rate decision, and the cheaper deal can disappear before you act. Our guide on whether to fix now or wait sets out how to weigh that against your own deal expiry.
If you are remortgaging, the window to start is roughly six months before your current deal ends. Beginning early lets you bank today's pricing as a floor while the application and valuation run, with the switch-down option still open if rates fall. Our remortgaging guide explains how the timing works in practice.
For a free initial consultation on whether to lock in a rate now or hold out for the next move, call 01202 155992 or contact Mortgage One.
What the cuts mean for buy-to-let landlords
Buy-to-let borrowers are seeing the competition too, with The Mortgage Works, Nationwide's buy-to-let arm, cutting selected buy-to-let and limited company fixes by up to 0.25 percentage points. Lower fixed pricing eases the rental stress test most lenders apply, typically 125% or 145% interest coverage at a notional rate, which can lift the maximum loan a given rent supports.
For portfolio and individual landlords, a lower pay rate feeds straight into affordability. Where a property was marginal on rental coverage, the repricing can be the difference between a case fitting and not, particularly on five-year fixes, where lenders often apply a lighter stress test. Specialist and limited company lending tends to reprice more slowly than the residential high street, so it is worth checking what has actually moved. Our buy-to-let mortgage guide covers how lenders assess rental income.
Will the mortgage rate cuts continue or stall?
The cuts could continue if swap rates keep easing, but there is no guarantee. CPI inflation was 2.8% in the year to May and two of the nine rate-setters voted to raise Bank Rate in June, so the committee is far from one-way on cuts. The next Bank of England decision is on 30 July 2026.
Forecasts are split. Some economists expect Bank Rate held at 3.75% for the rest of 2026, some expect a cut later in the year, and a minority expect a rise given the energy-driven inflation risk, with 2026 forecasts spanning roughly 3.50% to 4.25%. Because fixed pricing follows swaps rather than the base rate directly, the next few weeks of swap moves will matter more for most borrowers than the July meeting itself.
Figures as of 27 June 2026, London.
Whether to secure a rate now depends on when your current deal ends, so for a review of your options across the whole of market, call 01202 155992 or contact Mortgage One.
Back to Rate Forecast and Economic Drivers
The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you'd like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.
FAQs
1. Why are mortgage rates being cut if the base rate was held?
Lenders price fixed mortgages from swap rates, the wholesale cost of fixed funding, rather than directly from the Bank of England base rate. Swap rates have eased since the ceasefire between the US and Iran, so lenders have been able to cut fixed deals even though Bank Rate was held at 3.75% in June 2026.
2. Which lenders have cut mortgage rates?
Nationwide has made the broadest cut, reducing fixed rates by up to 0.25 percentage points across two, three, five and 10-year products. HSBC UK, First Direct, Yorkshire Building Society, West Brom Building Society and Skipton Building Society have also cut in recent days, alongside Nationwide's buy-to-let arm, The Mortgage Works.
3. Are mortgage rates going to drop below 4%?
Not yet on fixed deals. After the latest cuts, the lowest fixed rates start at around 4.19%, with leading two-year fixes from about 4.30% at low loan-to-value. A small number of tracker deals sit just below 4%, at around 3.96%, but these move with the base rate rather than offering a fixed payment.
4. Should I fix my mortgage for 2 or 5 years right now?
Two-year fixes give earlier access to lower rates if the cutting cycle continues, while five-year fixes lock in today's rate for longer if swaps turn higher again. Five-year pricing currently sits close to, and sometimes below, two-year pricing. The right term depends on your plans, so it is worth reviewing both against your circumstances.
5. Should I wait for rates to fall further before remortgaging?
Waiting can backfire. There is no guarantee rates fall further, and fixed pricing can move within hours of an inflation figure or rate decision. Reserving a deal now and switching down if pricing improves before completion usually gives you the upside of a fall without the risk of a rise.
6. Can I switch to a lower rate if mortgage rates fall after I lock in?
Often, yes. Most lenders let you reserve a new fixed rate up to six months before your deal ends, and many allow a switch to a lower rate if pricing falls before you complete. That is why securing a deal early rather than late usually carries little downside.
7. Does a broker help when rates are moving this quickly?
A broker can track which lenders have actually repriced, line up a deal as a floor, and switch you to a lower rate if one appears before completion, working across the whole of market. When pricing is moving weekly, that monitoring is the difference between catching a lower rate and missing it.