UK Mortgage Rates Outlook 2026:
Bank Rate, House Prices And Calculators
09 February 2026
UK mortgage pricing is being pulled in two directions: improving inflation expectations support the case for lower rates over time, while short-term market swings can still nudge fixed deals up or down. For borrowers, the practical focus is less about guessing the next move and more about comparing the real monthly cost of deals, checking affordability headroom, and understanding the risks that come with smaller deposits.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Bank Rate Signals And The Path For Fixed Deals
At its meeting ending on 4 February 2026, the Bank of England’s Monetary Policy Committee voted 5–4 to maintain Bank Rate at 3.75%, with four members preferring a 0.25 percentage point cut to 3.5%. The minutes also said that, on the basis of current evidence, Bank Rate is likely to be reduced further, but the timing and extent will depend on how the inflation outlook evolves.
For mortgage borrowers, “held” does not automatically mean “settled”. Lenders price many fixed-rate mortgages off expectations for future rates and the wholesale funding market, not purely today’s Bank Rate. That is why you can sometimes see fixed rates drift even when the headline decision is unchanged.
It also matters that the next Bank Rate decision date is already known (19 March 2026). That calendar effect can concentrate attention on the inflation and jobs data released between now and then, because those updates influence expectations for what happens next.
Why Fixed Rates Can Move Even When Bank Rate Holds
Most fixed-rate mortgage pricing is influenced by how markets see interest rates developing over the fixed period. In plain English, lenders are trying to avoid offering a long fixed deal at a price that later proves out of line with their own cost of funding and hedging. If market expectations shift (up or down), lenders often reprice quickly.
This is why “average” mortgage rates can still change even in a quiet central-bank month. Moneyfacts reported that the average two- and five-year fixed rates were below 5% at the start of February 2026 (4.85% and 4.94% respectively), while also noting that swap-rate moves and broader uncertainty can influence mortgage pricing.
For homeowners, the takeaway is that the most useful comparison is the all-in cost you actually pay: rate plus any product fee, over the period you expect to keep the deal. A slightly higher rate with a lower fee can sometimes be cheaper overall than a headline “low” rate with a large upfront charge, depending on the loan size and how long you keep it.
House Prices, Deposits And Negative Equity Risk
Two big price indices started 2026 with modest annual growth, but they still tell slightly different stories about the “average” UK home. Halifax reported an average house price of £300,077 in January 2026, up 0.7% month-on-month and 1.0% year-on-year.
Nationwide’s January 2026 release showed a 0.3% monthly rise and 1.0% annual rise, with an average price of £270,873 (not seasonally adjusted). Different lenders use different methodologies and data samples, so the gap does not mean one is “wrong” — but it does highlight why local area realities matter more than a single UK-wide number.
If you are buying with a smaller deposit, price changes matter more because your equity cushion is thinner. The key risk is negative equity — owing more than the home is worth — which can reduce remortgaging flexibility when your fixed deal ends. That risk is not a prediction that prices will fall; it is simply the downside you need to be able to live with when borrowing at a high loan-to-value.
This risk conversation is especially relevant because ultra-low-deposit products are reappearing. On 3 February 2026, Santander UK launched a five-year fixed “My First Mortgage” product up to 98% loan-to-value for first-time buyers, priced at 5.19% with zero product fee and £250 cashback, subject to criteria and affordability checks. Rates and criteria can change, and eligibility and affordability assessments apply.
Affordability Checks And The Role Of Stress Testing
Affordability is not just about the interest rate you start on. Lenders also assess whether you could still manage payments if rates were higher in future, alongside your wider household spending, debts, and financial commitments.
The Financial Conduct Authority’s interest rate “stress test” rule (MCOB 11.6.18R) requires lenders to take into account the impact of likely future interest rate increases on affordability for a minimum of five years (with specific exceptions, including where the initial fixed rate is for five years or more).
Separately, market-wide forecasts also suggest a busy refinancing year. UK Finance’s mortgage market forecast for 2026 said around 1.8 million fixed-rate mortgages are due to come to an end in 2026, and it expects external remortgaging to rise to £77 billion (up 10% year-on-year), alongside £261 billion of product transfers (up 2%).
If your deal ends this year, it is worth thinking in timelines rather than headlines. Many borrowers focus on the hope of lower rates “later”, but you also need to weigh: (1) the cost of waiting (often via a lender’s standard variable rate), (2) any early repayment charges if you leave too soon, and (3) whether your circumstances or property value could change before you remortgage.
How Mortgage Calculators Can Help You Plan
Mortgage calculators are most useful when you treat them as a planning tool, not a promise. They can help you compare scenarios quickly, but the result is only as good as the assumptions you feed in.
Two types matter most for consumers:
A repayment calculator estimates monthly payments based on the loan amount, term, and interest rate.
An affordability calculator estimates what you might be able to borrow by looking at income and outgoings, then showing what repayments could look like and what money you may have left each month.
MoneyHelper’s mortgage affordability calculator explains that it uses your income and monthly expenses to calculate affordability, and allows you to adjust the loan amount, repayment period and interest rate to see how results change.
Here are practical ways to use calculators well in the current market:
Stress-test your budget: run your payment at the deal rate, then re-run at a higher rate to see whether you still have breathing room.
Compare fee versus rate properly: if a deal has a product fee, add it to your effective cost comparison (especially on smaller loans where fees bite harder).
Match the term to your plan: a longer term usually reduces monthly payments but increases total interest paid over time.
Don’t ignore one-off costs: moving home, legal fees, valuation fees, insurance, and potential repairs can make the first year feel tighter than the calculator suggests.
If your income is variable (for example, overtime, bonuses, self-employed earnings, foreign currency income, or patterns seen with seafarers and expats), a basic calculator may not reflect how a lender will assess it. In those cases, calculators are still helpful for budgeting, but you may want advice on how lenders look at payslips, contracts, accounts, and currency conversions in practice.
The Bank of England also provides a borrowing calculator that can be used to estimate loan and mortgage payment costs, which can be a helpful cross-check when you are sense-checking monthly repayments under different rates and terms.
Key Numbers To Watch
Bank Rate: 3.75% (held on 5 February 2026; next due 19 March 2026)
Consumer Prices Index inflation: 3.4% in December 2025
Average two-year fixed mortgage rate: 4.85% (start of February 2026)
Average five-year fixed mortgage rate: 4.94% (start of February 2026)
Halifax UK average house price (January 2026): £300,077 (+0.7% monthly; +1.0% annual)
Nationwide UK average house price (January 2026, not seasonally adjusted): £270,873 (+0.3% monthly; +1.0% annual)
UK Finance 2026 forecast: 1.8 million fixed-rate mortgages due to end in 2026
Stamp Duty Land Tax main residential threshold (England and Northern Ireland): payable on the portion above £125,000 (unless reliefs apply)
First-time buyer relief (England and Northern Ireland): no Stamp Duty Land Tax up to £300,000, with relief up to £500,000 (eligibility conditions apply)
Example of high loan-to-value lending: Santander UK “My First Mortgage” launched 3 February 2026 up to 98% loan-to-value (criteria, eligibility and affordability checks apply; rates can change)
Figures as of 8 February 2026 London
What To Watch Next If You’re Buying Or Remortgaging
Over the next few weeks, the data that tends to matter most for mortgage pricing is anything that changes the market’s view of where Bank Rate is heading and how quickly inflation is cooling. The Bank of England minutes explicitly linked the near-term inflation outlook to developments in energy prices and expected CPI inflation to fall back towards target from April, so upcoming inflation releases and wage data will stay in focus.
If you are buying, focus on what you can control: your deposit size, your credit profile, and how robust your budget looks under higher-rate scenarios. If you are remortgaging, map your end date and any early repayment charges, then compare (a) a new fix, (b) a tracker, and (c) staying put on a reversion rate, using calculators to translate each into a realistic monthly payment and overall cost.
Mortgage One is a qualified mortgage adviser and appointed representative of Quilter Financial Services Ltd. If you want help sense-checking what current market moves could mean for your borrowing range, your remortgage timeline, or your monthly payment risk, Mortgage One can talk through options based on your circumstances and lender criteria at the time of application.
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.
Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.
FAQs
1. What does Bank Rate mean for UK mortgage rates in 2026?
Bank Rate influences the wider cost of borrowing, but many fixed-rate mortgages move mainly with market expectations for future rates and lenders’ funding costs. A Bank Rate hold can still coincide with fixed-rate repricing.
2. Why can fixed mortgage rates change even when Bank Rate is unchanged?
Fixed rates are often priced using wholesale market rates and expectations for where Bank Rate will be over the fixed period. If markets reprice those expectations, lenders may adjust mortgage rates.
3. What is the difference between a mortgage repayment calculator and an affordability calculator?
A repayment calculator estimates monthly payments from the loan, rate and term. An affordability calculator considers income and outgoings to estimate what you might be able to borrow and whether repayments look sustainable.
4. How should I use a mortgage calculator when rates are volatile?
Run at the deal rate, then stress-test at a higher rate to see if your budget still works. Also compare the impact of fees and different terms so you understand the total cost, not just the headline rate.
5. Are 2% deposit or very high loan-to-value mortgages risky?
They can help where saving a deposit is the main barrier, but they usually come with higher rates and a greater risk of negative equity if house prices fall. They are also typically subject to strict eligibility and affordability checks.
6. My fixed rate ends in 2026. When should I start reviewing options?
Many borrowers start reviewing several months ahead so they can compare deals, check any early repayment charges, and plan paperwork. The right timing depends on your lender’s policy, your deal end date, and your circumstances.
7. How do Financial Conduct Authority rules affect how much I can borrow?
Lenders must assess affordability, including considering the impact of likely future rate rises through stress testing rules (with some exceptions). This can affect the maximum loan offered, especially at higher loan-to-value levels.