UK mortgage market update: oil prices fall, lenders cut rates in response
Halifax, Accord Mortgages, TSB and HSBC all cut mortgage rates this week, taking the average two-year fix to 5.59% and the average five-year fix to 5.63% (Moneyfacts, 25 August). The likely reason: oil prices fell sharply through the week, from the mid-$90s to around $83 a barrel by Friday, as diplomatic progress eased fears over the Strait of Hormuz.
Here’s how that connects, what actually moved, and what it means depending on your situation.
This week at a glance
| Halifax, Accord Mortgages, TSB and HSBC all cut rates this week. HSBC's cuts land 1 September, the others took effect during the week itself | |
| Oil prices fell sharply, from the mid-$90s to around $83 a barrel by Friday, on signs of de-escalation around the Strait of Hormuz, plausibly what gave lenders room to cut | |
| Average rates continued easing. The two-year fix fell to 5.59% and the five-year to 5.63% (Moneyfacts, 25 August) | |
| Over 45% of UK buy-to-let property is now held through limited companies, rising to nearly 58% among larger portfolios, with a significant rate gap between personal and company ownership | |
| No UK house price index, CPI print or base rate decision landed this week. The data calendar was genuinely quiet, with the next major dates falling in September | |
| New ONS data confirmed mortgage interest payments are a measurable driver of the cost-of-living gap between renters, mortgaged homeowners and outright owners |
Why oil prices are moving your mortgage rate
This is the connection worth understanding, because it’s genuinely the story behind this week’s cuts.
Brent crude fell across multiple sessions this week, dropping to around $87 a barrel by Thursday and roughly $83 by Friday, down from the mid-$90s in the days beforehand. The trigger was a reported revenue-sharing agreement between Iran and Oman over the Strait of Hormuz, alongside signs of progress in Pakistani-mediated talks between the US and Iran. Iran was careful to stress the Oman agreement doesn’t guarantee an immediate reopening of the strait, so this is a genuine easing of tension rather than a resolution. Goldman Sachs estimated Gulf oil exports have recovered to around 15 to 16 million barrels a day, still well below the pre-conflict level of 22 to 24 million, but a sharp recovery from a low of just 5 to 6 million in March.
Lower oil prices ease future inflation expectations, which is exactly the channel that feeds through into swap rates, and from there into fixed mortgage pricing. It’s the same mechanism that pushed rates up earlier in the summer, now working in reverse. If this de-escalation holds into September, it supports the case for rates continuing to ease gently. A reversal would likely reintroduce pressure within days.
Lenders cutting rates this week
Lenders cutting rates this week
| Lender | Change | Effective |
|---|---|---|
| Halifax Intermediaries | Cut up to 0.11% on selected fixed rates for home movers and first-time buyers, and 0.13% on the 60% LTV 2-year remortgage rate | 24 August |
| Accord Mortgages | 3-year fixed rates down up to 0.37%, 5-year down up to 0.05%, 2-year fixes to 90% LTV down 0.20%, to 80% LTV down 0.15% | 27 August |
| TSB | 2, 3 and 5-year fixed purchase rates cut up to 0.20%, 3-year remortgage cut 0.15%, followed by product transfer and additional borrowing cuts | 25 & 28 August |
| HSBC | Cuts across first-time buyer, home mover, remortgage, switching and international ranges, mostly at 60–75% LTV | 1 September |
TSB’s product transfer and additional borrowing rates were also cut by Friday, with two-year fixed product transfer rates now starting at 4.54% at 60% loan-to-value, rising to 5.14% fee-free at 80 to 85% LTV, and five-year fixed product transfer rates from 4.64% at 60% LTV.
Worth flagging directly: HSBC’s cuts don’t take effect until 1 September, so if you’re mid-application with them, it’s worth checking whether the timing changes anything for your case.
Average mortgage rates this week
Average mortgage rates this week
| Product | 25 Aug 2026 | Trend | |
|---|---|---|---|
| Two-year fixed | 5.59% | Down on last week | |
| Five-year fixed | 5.63% | Down on last week | |
| Bank of England base rate | 3.75% | Held 30 July |
The best rates available this week
Best-buy rates, 28 August 2026
| Product | Lender | Rate | Fee |
|---|---|---|---|
| Best 2-year fixed (remortgage) | Halifax | 4.53% | £999 |
| Best 3-year fixed (purchase) | Halifax | 4.33% | £1,099 |
| Best 5-year fixed (purchase) | Halifax | 4.38% | £1,099 |
| Best 2-year fixed (purchase) | Danske Bank | 4.32% | £1,124 |
Source: Moneyfacts / Mortgage Advice Bureau, updated 28 August 2026. The lowest headline rate is not always the same as the best overall value once fees are factored in.
Buy-to-let: the incorporation gap is getting harder to ignore
Buy-to-let ownership: personal vs limited company
Held through limited companies (all BTL)
45.1%
Of all UK buy-to-let ownership
Held through limited companies (larger portfolios)
57.6%
Among bigger landlord portfolios specifically
Avg. rate, personally owned
4.76%
Avg. rate, company owned
6.44%
Source: Lendlord Q3 2026 report, published via Mortgage Solutions, 26 August 2026. Rate gap reflects mortgage pricing only; overall cost depends heavily on individual tax position.
New data this week from Lendlord found that over 45% of UK buy-to-let property is now held through limited companies, rising to nearly 58% among larger portfolios. The reason isn’t hard to see: average mortgage rates for company-owned property sit meaningfully higher than for personally-owned property, but the tax treatment often more than makes up the difference for higher-rate taxpayers and larger portfolios. If you’re still holding property personally and building out a portfolio, this is genuinely worth a proper conversation rather than a decision made by default.
What else happened in housing and policy this week
A few smaller stories worth knowing about:
Property transactions eased slightly. HMRC’s provisional figures for July showed 96,710 transactions, down 2% on June and down 1% on the same month last year, suggesting the brief improvement seen earlier in the summer hasn’t turned into a lasting trend.
A major social housing funding announcement landed. Homes England named 33 strategic partners for its Social and Affordable Homes Programme, running from 2026 to 2036, with the largest allocations going to Orbit Group, Vistry Homes, Onward Homes and Clarion Housing, each receiving around £350 million to deliver several thousand new homes.
Later-life lending kept growing steadily. UK Finance data for the second quarter showed 5,730 new lifetime mortgages advanced, worth £490 million, alongside 323 retirement interest-only mortgages, worth £31 million and up nearly 6% year on year.
Mortgage terms keep stretching. FCA data cited this week showed 72% of new mortgages sold in 2025 ran for more than 20 years, and roughly a third were 30 years or longer, a reminder of how much affordability pressure has shaped borrowing decisions over the past few years.
What was happening at the Bank of England
The Bank of England’s Andrew Bailey attended the Jackson Hole Economic Policy Symposium in Wyoming this week, alongside MPC member Catherine Mann, who spoke on Friday. Coverage of the event suggested the Bank’s presence was a secondary story compared to the US Federal Reserve, and full detail of Mann’s remarks wasn’t available at the time of writing, so there’s genuinely nothing conclusive to report from it yet. No UK inflation data or base rate decision fell within this window. Both are due in September: the next CPI print on 16 September, and the next base rate decision the following day, 17 September.
What to watch next week
What to watch next week
| 1 September, HSBC's rate cuts take effect | |
| Tuesday 16 September, August's inflation figure, the last major data point before the next base rate decision | |
| Thursday 17 September, the next Bank of England base rate decision | |
| Ongoing, oil prices and the Strait of Hormuz situation, still the clearest leading indicator for where fixed rates go next |
What this means for you
If your deal is ending in the next six months, this week’s cuts support the same advice as before: reserve a rate now, with the option to switch if something better appears before you complete. If you’re specifically applying through HSBC, it’s worth checking whether timing your application either side of 1 September makes a difference to your case.
If you’re a landlord with more than one or two properties, the incorporation data this week is worth a proper look. The rate gap between personal and company ownership is real, but so is the tax treatment difference, and the right answer depends entirely on your specific portfolio and tax position.
If you’re watching for the next real move in rates, the oil price is currently the clearest signal. A continued de-escalation supports further gentle easing; any reversal around the Strait of Hormuz would likely reintroduce pressure within days.
Frequently asked questions this week
Why are mortgage rates falling this week?
The most likely driver is oil. Brent crude fell from the mid-$90s to around $83 a barrel this week, following signs of de-escalation around the Strait of Hormuz. Lower oil prices ease future inflation expectations, which feeds through to swap rates and then to fixed mortgage pricing, giving lenders room to cut.
Which lenders cut mortgage rates this week?
UK CPI inflation was 2.9% in July 2026, up from 2.6% in June, according to the ONS. Core inflation, which excludes energy and food, held at 2.6%, while services inflation eased slightly to 3.4%.Halifax Intermediaries, Accord Mortgages, TSB and HSBC all reduced rates during the week of 24 to 28 August 2026. HSBC's cuts take effect from 1 September.
What is the average UK mortgage rate right now?
As of 25 August 2026, the average two-year fixed rate was 5.59% and the average five-year fixed rate was 5.63%, according to Moneyfacts.
Is it better to own buy-to-let property personally or through a limited company?
It depends on your circumstances. Company mortgage rates are typically higher than personal buy-to-let rates, but the tax treatment can be more favourable, particularly for higher-rate taxpayers and larger portfolios. Over 45% of UK buy-to-let property is now held through limited companies, and it's worth taking advice specific to your situation rather than assuming one route suits everyone.
When is the next Bank of England interest rate decision?
The next decision is Thursday 17 September 2026, preceded by August's inflation figure on 16 September.
This article is for information only and does not constitute financial advice. Rates quoted are accurate as at the dates stated and are subject to change or withdrawal without notice. Sources: Bank of England, Office for National Statistics, HMRC, Moneyfacts, UK Finance, Homes England, and UK mortgage trade press published 24 to 28 August 2026.
Reviewed by Brennan Goodwin, CeMAP-qualified mortgage adviser at Heron Financial. Last updated: 29th August 2026.