Summary
Update on the state of the UK mortgage market in August 2026, including the latest Bank of England decision, mortgage pricing trends and what borrowers should consider over the coming months.
Key points of Change
On 30th July, the Monetary Policy Committee (MPC) voted 6–3 to hold the Bank of England base rate at 3.75%. The reasoning is that inflation remains above target and the BoE is exercising patience and caution in the face of ongoing global uncertainty.
The appointment of Andy Burnham as Prime Minister and John Healey as Chancellor of the Exchequer has not had much of an impact on markets yet. Markets are waiting to see what policies will be announced and how they will be funded.
What does this mean for mortgage borrowers?
The decision to leave the Bank Rate unchanged means borrowers on tracker mortgages should generally see no immediate change to their interest rates.
As in my previous market update, fixed-rate mortgage deals are a different story. They are largely influenced by swap rates rather than the Bank of England base rate itself. Throughout July, movements in the wider financial markets led many lenders to increase fixed-rate pricing.
Jamie’s View – What’s next?
As a broker, I saw a series of fixed-rate rises across numerous lenders throughout July. According to Rightmove, the average two-year fixed mortgage rate is currently 5.11%. For broader context, this is up from 4.25% before the conflict involving Iran started, but down from around 5.43% at the peak of tensions in April.
Earlier this year, there was a feeling that if borrowers just waited a little longer, cheaper funding might be around the corner, but this is much less likely now.
I always advise clients to focus on the best or most financially suitable deal available now rather than try to “beat the market”, which is difficult even in the most stable conditions and impossible in the current environment.
Anything could happen in August and onward. There’s no predicting right now. While mortgage rates could move in either direction over the coming months, trying to perfectly time the market remains extremely difficult.
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