Are Mortgage Rates Going Up in the UK Right Now?
As of July 2025, UK mortgage rates are not going up — in fact, the latest data shows the first sustained weekly decline in average fixed rates since February 2025. However, the picture is more nuanced than a simple yes or no: rates remain historically elevated, the path downward is gradual, and global events can reverse progress quickly. Here is what the data actually shows and what it means for your next move.
What Is Driving UK Mortgage Rates Right Now?
The primary driver of fixed mortgage rates in the UK is swap rates, not the Bank of England base rate — and understanding this distinction is essential for any borrower trying to time the market.
Swap rates are the interest rates at which banks lend to each other over fixed periods (typically two or five years). Lenders use these as the benchmark cost of funding fixed-rate mortgages. According to data from the Bank of England's gilt yield and swap rate data, five-year swap rates spiked sharply in late April and May 2025, driven by two intersecting forces:
- Geopolitical risk premium: Escalating tensions in the Middle East, particularly around Iran, pushed global investors towards safe-haven assets and caused volatile bond market movements that fed directly into swap rates.
- Persistent UK inflation: According to ONS Consumer Price Inflation data, UK CPI remained stickier than expected into spring 2025, dampening expectations of rapid base rate cuts and keeping swap rates elevated.
The ceasefire developments in the Middle East during June 2025 helped ease that geopolitical risk premium, and swap rates softened as a result — which is the direct reason lenders began trimming their fixed-rate products for the first time in months.
What Does the Latest House Price and Mortgage Rate Data Show?
According to Rightmove's July 2025 House Price Index, average asking prices remained resilient, with buyer demand holding up despite affordability constraints — a signal that many borrowers are proceeding with purchases rather than waiting for rates to fall further. Rightmove also noted that the average five-year fixed mortgage rate had declined week-on-week for the first time since February 2025, marking a tentative but meaningful shift in direction.
To give you a clearer picture of where rates stand, here is a comparison of approximate average rates at different points in 2025 (as of July 2025, based on major lender pricing):
| Period | Avg 2-Year Fixed Rate | Avg 5-Year Fixed Rate | Key Driver |
|---|---|---|---|
| January 2025 | ~5.0% | ~4.75% | Post-autumn Budget repricing |
| February 2025 | ~4.85% | ~4.65% | Rate cut optimism |
| May 2025 (peak) | ~5.2% | ~4.95% | Geopolitical risk + sticky inflation |
| July 2025 | ~4.95% | ~4.75% | Ceasefire relief, swap rate softening |
What Is the Bank of England Saying About Future Rate Cuts?
The Bank of England's Monetary Policy Committee (MPC) has signalled a cautious, gradual approach to cutting the base rate throughout 2025. According to the Bank of England's monetary policy pages, the MPC reduced Bank Rate to 4.25% at its May 2025 meeting, but stressed that any further cuts would be data-dependent and gradual — ruling out the kind of rapid easing that some borrowers had been hoping for.
Market expectations, as reflected in swap rates, currently price in two to three further 0.25% cuts before the end of 2025 — which would bring Bank Rate to around 3.5%–3.75% by early 2026. However, these expectations can shift rapidly based on inflation data, employment figures, and geopolitical developments.
Should You Fix Your Mortgage Now or Wait for Rates to Fall?
For most borrowers, fixing now at current rates is a more prudent strategy than waiting — but the right answer depends on your specific circumstances, deal expiry date, and risk tolerance. Here is a practical framework:
When does fixing now make sense?
- Your current deal expires within the next three to six months
- You are on your lender's Standard Variable Rate (SVR), which is almost certainly higher than any fixed deal available
- You need payment certainty and cannot afford for rates to spike again
- You are purchasing a property and need to lock in certainty for completion
When might waiting make sense?
- Your current fixed deal does not expire for nine or more months
- You can afford to absorb a temporary rate increase if the market moves against you
- You believe swap rates will fall materially before your deal expires
Use our mortgage calculator to compare your current monthly payments against available fixed-rate deals, and our affordability calculator to understand how much you can borrow at today's rates.
How Do Swap Rates Affect Me as a Borrower — And Why Should I Care?
Swap rates affect you directly because they determine the profit margin lenders can offer on fixed-rate mortgages. When swap rates fall, lenders can reduce their rates while maintaining the same margin — and competition between lenders accelerates this process. When swap rates rise, lenders reprice upward within days, sometimes hours.
This means a mortgage broker monitoring swap rate movements in real time can alert you to the ideal moment to lock in a rate — something that is impossible to do effectively on your own while managing a property purchase or remortgage. You can read more about how this works in our comprehensive remortgaging guide.
What About Geopolitical Risk — Can the Iran Situation Push Rates Back Up?
Yes, it can. The May 2025 rate spike demonstrated clearly that geopolitical events have a direct and rapid impact on UK mortgage pricing via their effect on global bond markets and swap rates. While the ceasefire developments in the Middle East helped ease rates in June and July 2025, any re-escalation could reverse those gains within days.
This is precisely why borrowers close to needing a new deal should not treat the current softening as a guaranteed trend. Securing a rate now — even if it is not the absolute lowest it will ever reach — removes the risk of being caught by another external shock.
Fixed vs Variable: Which Is Better Right Now?
| Feature | Fixed Rate | Tracker / Variable Rate |
|---|---|---|
| Payment certainty | ✅ Yes — payments locked for term | ❌ No — moves with base rate |
| Benefits if rates fall | ❌ No — you are locked in | ✅ Yes — rate drops automatically |
| Risk if rates rise | ✅ Protected | ❌ Payments increase |
| Best for | Certainty seekers, tight budgets | Those expecting rapid rate cuts |
| Early repayment charges | Usually yes | Often no (tracker with no ERCs) |
For borrowers with bad credit or complex income, the calculus is slightly different — fewer lender options mean less flexibility to switch later. Our bad credit mortgages guide covers how to approach rate decisions in those circumstances.
What Is the Bottom Line for UK Borrowers Right Now?
UK mortgage rates are not going up right now — they have edged down from their May 2025 peak, and market conditions suggest further gradual improvement through 2025 and into 2026. However, the path is not guaranteed, the improvements are modest, and the cost of waiting on an SVR almost always outweighs the benefit of a marginally cheaper fix later. If you need a mortgage in the next six months, act now, get professional advice, and use the tools available to you to find the best available deal.
Check your loan-to-value ratio first — borrowers with 25–40% equity or deposit access significantly better rates, and a small improvement in your LTV band can save more than waiting months for a market movement.