UK mortgage market update July 17 2026: rates rise again after a fortnight of cuts
As of 16 July 2026, five major UK lenders, NatWest, Nationwide, Virgin Money, Barclays and Coventry Building Society, have raised their fixed mortgage rates, ending a fortnight of falling prices. The Bank of England base rate remains at 3.75%, held at the June meeting, with the next decision due on 30 July. The average two-year fixed rate has edged up to 5.48% and the average five-year fixed to 5.50% (Moneyfacts, 16 July 2026).
This week’s market moved in a direction most borrowers weren’t expecting. After weeks of lenders cutting prices to compete for business, several reversed course within days of each other. Here’s what happened, why, and what it means depending on your situation.
Key Takeaways:
- Five major lenders, NatWest, Nationwide, Virgin Money, Barclays and Coventry, raised fixed rates this week, reversing a two-week run of cuts
- The trigger was renewed conflict in the Middle East pushing swap rates back above 4%
- The Bank of England base rate held at 3.75%, with the next decision due on 30 July
- The average two-year fix rose to 5.48% and the average five-year to 5.50% (Moneyfacts, 16 July)
- House price data stayed cautiously positive, with Nationwide reporting annual growth up to 2.2% and RICS suggesting the downturn "may be easing"
This week’s big story: rates went up, not down
For most of June and the first half of July, the story in the mortgage market was falling rates. Lenders were cutting fixed prices to win business, and borrowers who’d been waiting were finally seeing some relief. That changed abruptly this week.
Lender rate changes this week
| Lender | Change | Direction | Effective |
|---|---|---|---|
| Nationwide | Up to 0.35% | 16 July 2026 | |
| Virgin Money | Up to 0.35% | 16 July 2026 | |
| Barclays | Up to 0.34% | 16 July 2026 | |
| NatWest | Up to 0.27% | 17 July 2026 | |
| Coventry Building Society | Mixed: up on some, down up to 0.11% on selected FTB deals | Week of 16 July 2026 |
Nationwide’s increases were the most wide-reaching, covering first-time buyer, home mover, existing customer and remortgage ranges, with rises of up to 0.35 percentage points. To put that in real terms, its leading two-year fix for home movers moved from 4.24% to 4.59%, which works out at roughly £40 more a month, or around £480 a year, on a typical mortgage.
NatWest’s increases take effect from tomorrow, Friday 17 July, with its lowest standard residential rate now sitting at 4.30% for a two-year fix at 60% loan-to-value.
Not every lender moved in the same direction. Coventry Building Society raised some fixed rates while actually cutting selected first-time buyer deals by up to 0.11 percentage points, a reminder that even in a rising week, individual deals can still buck the trend. Several other lenders and building societies, including Skipton, Lloyds Bank, Halifax, Leeds Building Society and Leek Building Society, also repriced this week, mostly upward.
Why now? Fixed mortgage rates are priced off swap rates, essentially what the financial markets expect interest rates to do over the next few years, rather than the Bank of England’s base rate directly. Swap rates had dipped below 4% at the start of July, which is what had allowed the recent run of cuts. Renewed hostility in the Middle East pushed that uncertainty straight back into the market, and swap rates rose again, with two-year swaps moving to around 4.18% and five-year to around 4.26% by midweek.
As one senior broker put it this week, several lenders moving in quick succession is usually a signal that others won’t be far behind, and anyone who’d been holding out for further cuts may need to reconsider that plan, at least for now.
How this week’s average rates compare
The rise is small in percentage terms, but it’s a symbolically important turn. June had just delivered the fastest monthly fall in average rates in nearly two years, with both the two-year and five-year averages settling at 5.52%, their lowest since March. This week’s uptick doesn’t undo that progress, but it does suggest the recent momentum has, for now, stalled.
A note on averages versus your actual rate. The figures above are whole-market averages across all deposit sizes, and they also include higher-risk and adverse credit lending, which pulls the average up. Your actual rate depends heavily on your deposit, circumstances, and credit profile.
Average fixed rates this week
| Product | Mon 13 Jul | Wed 15 Jul | Thu 16 Jul | Trend |
|---|---|---|---|---|
| Average 2-year fixed | 5.46% | 5.47% | 5.48% | |
| Average 5-year fixed | 5.48% | 5.49% | 5.50% |
The Bank of England and inflation: what’s actually driving this
The Bank of England base rate has been held at 3.75% since June, when the Monetary Policy Committee voted 7 to 2 to keep it unchanged. The two dissenting members wanted a rise to 4.00%. The next decision lands on 30 July, alongside a full Monetary Policy Report, making it a significant date to watch.
Inflation (CPI) was last recorded at 2.8% in May, and the Bank has actually lowered its forecast for where inflation will peak this year, now expecting around 3.25% in the final quarter, down from an earlier estimate of 3.6%. The next CPI figure, covering June, lands on 22 July, just days before this article was written, and will be the first real test of whether that improving trend is holding.
Markets currently expect the base rate to stay at 3.75% for the rest of the year, though a meaningful minority of economists think at least one rate rise is now more likely than a cut, largely because of the renewed Middle East uncertainty. Nothing is decided until the data lands, but it’s worth knowing the mood has shifted from “rates might fall further” to “rates are more likely to hold or rise” over the past week.
Average rates by deposit size
| Product / LTV | As of 1 Jul | June figure |
|---|---|---|
| 2-year fixed at 60% LTV | 4.97% | was 5.17% |
| 5-year fixed at 60% LTV | 5.23% | was 5.29% |
| 2-year fixed at 95% LTV | 6.13% | was 6.23% |
| 5-year fixed at 95% LTV | 5.92% | was 6.02% |
| Average 2-year tracker | 4.49% | |
| Average Standard Variable Rate | 7.13% | unchanged |
House prices and the wider housing market
The housing data released this week and in early July has been more encouraging than the mortgage rate story:
- Nationwide reported annual house price growth picking up to 2.2% in June, from 1.7% in May, with the average UK property now at £277,484. Northern Ireland remained the strongest performing region, up 8.6% year on year.
- The Lloyds House Price Index (the rebranded Halifax index, same methodology, new name from this month) showed prices rising 0.2% in June, the first monthly increase in four months.
- RICS’ latest survey suggested the housing downturn “may be easing,” with new buyer enquiries improving to their least negative reading since February. RICS was careful to call this “cautious encouragement” rather than a confirmed recovery, noting that any improvement is now being tested by fresh political uncertainty.
What’s happening in Westminster and at the regulator
Two things worth knowing beyond rates and house prices:
A change of Prime Minister. Andy Burnham has replaced Keir Starmer this week. Lenders and surveyors have repeatedly cited the resulting political uncertainty as a factor weighing on sentiment, alongside the Middle East situation, so it’s genuinely part of the same story rather than a separate headline.
The FCA is reviewing mortgage rules. A consultation on supporting first-time buyers and previously declined borrowers closes on 28 July. The proposals include more flexibility for self-employed and variable income assessment, and a more lenient approach to minor past credit issues. Separately, the government’s consultation on a new First Time Buyer ISA, designed to eventually replace the Lifetime ISA, closes on 17 August. Nothing here changes today, but both are worth knowing about if you’re a first-time buyer planning ahead, since either could shift the picture over the next year or two.
What this means for you
If your fixed deal ends in the next six months
This is the group this week’s news matters most for. Rates have just started moving upward after a period of decline, which strengthens the case for locking in a rate now rather than waiting. Most lenders let you secure a rate up to six months ahead of your current deal ending, and if pricing eases again before you complete, you can usually still switch to something cheaper. There’s very little downside to acting now.
If you’re a first-time buyer
The rate rises this week affect purchase deals too, though house prices staying broadly stable is a small offsetting positive. If your income is self-employed, contractor-based, or otherwise complex, it’s worth knowing the FCA’s current consultation could eventually make affordability assessments more flexible, though nothing changes in the immediate term.
If you have complex income or were previously declined
Existing FCA flexibility introduced last year already means a large share of the market takes a more generous approach to affordability stress testing, in some cases unlocking around £30,000 of extra borrowing for the right circumstances. If you were turned down some time ago, it may be worth revisiting.
If you let property
Coventry Building Society’s rate moves this week touched buy-to-let as well as residential, so if you have a BTL deal maturing, it’s worth checking where things currently stand rather than assuming last month’s numbers still apply.
What we’re watching next week
Frequently asked questions this week
Why did mortgage rates go up this week after weeks of falling?
Renewed conflict in the Middle East pushed swap rates, which lenders use to price fixed-rate mortgages, back above 4% after they had briefly dipped below that level. Several major lenders, including Nationwide, NatWest, Barclays and Virgin Money, responded by raising their fixed rates within days of each other.
What is the UK base rate right now?
The Bank of England base rate is 3.75%, held at the June 2026 meeting by a 7 to 2 vote. The next decision is due on 30 July 2026.
Is now a bad time to remortgage?
Not necessarily. Rates rising slightly doesn't mean you've missed the best available deal, but it does strengthen the case for securing a rate now rather than waiting, since most lenders let you lock in up to six months ahead and switch later if pricing improves.
Are mortgage rates expected to keep rising?
It's genuinely uncertain and depends heavily on how the situation in the Middle East develops and what June's inflation figure shows on 22 July. Markets currently expect the base rate to hold for the rest of the year, though a meaningful share of economists now see a rate rise as more likely than a cut.
What is the average two-year fixed mortgage rate right now?
As of 16 July 2026, the average two-year fixed rate was 5.48%, according to Moneyfacts, up slightly from 5.46% at the start of the week. This is a whole-market average; your actual rate depends on your deposit and circumstances.
This update draws on reporting from Mortgage Solutions, The Intermediary, Mortgage Strategy, Moneyfacts, the Bank of England, the Office for National Statistics, Nationwide, Lloyds Banking Group and RICS, covering the week of 13 to 17 July 2026. Figures are correct as of the dates stated and change frequently. This is general market information, not personal financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
Reviewed by Brennan Goodwin, CeMAP-qualified mortgage adviser at Heron Financial. Last updated: 17 July 2026.