UK mortgage market update August 14 2026: rates fall for the first time in over a month
Average mortgage rates fell for the first time in over a month this week, with the two-year fix dropping from 5.63% to 5.61% and the five-year from 5.67% to 5.64% (Moneyfacts, 14 August). Santander and NatWest each cut over 200 rates, and HSBC cut across its range from 11 August. Not every lender moved the same way, though: Halifax, the UK’s largest lender, raised rates against the trend, which is exactly why comparing the whole market still matters this week.
Here’s what actually happened, and what it means depending on your situation.
This week at a glance
| Average fixed rates fell for the first time in over a month. The two-year fix dropped to 5.61% and the five-year to 5.64% (Moneyfacts, 14 August) | |
| Santander and NatWest each cut over 200 rates, and HSBC cut across its range from 11 August, in the broadest repricing round of the summer so far | |
| Halifax, the UK's largest lender, raised rates against the trend, a reminder that the cheapest lender changes week to week | |
| Q2 GDP grew 0.4%, in line with expectations, though down from 0.6% the previous quarter (ONS, 13 August) | |
| The housing market is subdued but stabilising. RICS reported buyer enquiries improving for a fourth consecutive month, with surveyors now expecting prices to be higher, not lower, in 12 months' time | |
| No fresh action from the FCA this week. Its mortgage rule review consultation remains under consideration, with a policy statement expected in the second half of 2026 |
A broad repricing round, but not a uniform one
The week’s dominant theme was a genuinely broad-based round of cuts from major lenders, only partly offset by Halifax moving the other way. As Mortgage Solutions put it in its 14 August round-up, HSBC’s cuts were the main story of the week, following a run of reductions from several major lenders.
Lender cuts in detail
| 2-year fix, 90% LTV (£1,499 fee, £250 cashback) | 5.04% 4.84% |
| 2-year fix, 95% LTV (no fee) | 5.69% 5.49% |
| 5-year remortgage fix, 60% LTV | 4.71% |
| 10-year fix, 95% LTV, home movers | 5.95% 5.70% |
| 2-year fixed BTL remortgage, 75% LTV (no fee) | 5.41% 5.17% |
| 2-year fix, 95% LTV (no fee) | 5.59% 5.38% |
| 2-year fix, 90% LTV, first-time buyer | 5.02% 4.86% |
| Reductions across residential, BTL and international ranges, covering first-time buyer, up to 95% LTV, home mover and remortgage deals |
Not every lender joined the trend. First direct had already increased selected fixed prices by up to 32 basis points towards the end of the previous week, and Halifax raised fixed rates for home movers and first-time buyers by up to 12 basis points, and remortgage rates by up to 5 basis points, a counter-trend move brokers put down to managing volume rather than a change in Halifax’s outlook. Virgin Money also lifted its buy-to-let product transfer rates by up to 15 basis points.
The lowest rates available this week
Best-buy snapshot, 12 August 2026
| Product | Lender | Rate |
|---|---|---|
| Lowest 2-year fixed remortgage | HSBC | 4.64% |
| Lowest 3-year fixed remortgage | first direct | 4.64% |
| Lowest 5-year fixed remortgage | Principality BS | 4.66% |
| Lowest 2-year fixed home mover | HSBC | 4.54% |
| Lowest 5-year fixed home mover | NatWest | 4.54% |
| First-time buyer, 90% LTV, 2-year | West Brom BS | 4.78% |
| First-time buyer, 95% LTV, 2-year | West Brom / Leeds BS | 5.15% |
Source: Moneyfacts, as of 12 August 2026. These are the very best available rates, generally at lower loan-to-values. Whole-market averages sit well above these figures.
Worth remembering: these are the very best deals available, generally at lower loan-to-values, not what most people will actually be offered. The whole-market averages sit well above these figures.
Why rates are falling, even with the base rate on hold
Swap rates, the true driver of fixed mortgage pricing, kept drifting lower this week, having already fallen back from their late-July highs. That easing, not any change from the Bank of England, is what’s given lenders room to cut. Moneyfacts’ Rachel Springall summed it up plainly: swap rates have fallen away from their 30-day highs, giving a couple of lenders room to cut selected rates, but the market would need a much bigger scale of cuts to meaningfully bring costs down, which looks unlikely while tensions in the Middle East continue.
The Bank of England’s base rate remains at 3.75%, held on 30 July by a hawkish 6 to 3 vote, with three members backing an immediate rise to 4%. No new commentary came from the Bank this week, a typical summer lull after the July decision. The next two dates that matter are 19 August, when July’s inflation figure lands, and 17 September, the next base rate decision.
The economy: resilient, but slowing
The ONS published its first estimate of Q2 GDP on 13 August, showing the economy grew 0.4% between April and June, in line with expectations but down from 0.6% in the previous quarter. Growth was driven by services, particularly computer programming and advertising, while construction grew modestly and production was flat. The economy was 1.2% larger than a year earlier. Commentators described the reading as resilient, though several warned against reading too much into it, since part of June’s bounce was linked to World Cup spending and a summer heatwave.
No labour market data was published this week. The most recent figures, covering March to May and released in July, showed unemployment at 4.9% and pay growth easing toward the low 3% range, both consistent with the gradual loosening that’s been helping swap rates drift down.
The housing market: still weak, but stabilising
RICS housing market pulse, July 2026
New buyer enquiries
-28%
Improved from -41% in March
New vendor instructions
-4%
Improved from -23% in June
Agreed sales
-30%
Unchanged from June
Near-term sales expectations
-14%
Improved for a 4th consecutive month
House price balance
-30%
Improved from -32%
12-month price expectations
+4%
Most positive reading since February
Source: RICS UK Residential Market Survey, published 13 August 2026, covering July 2026. Figures are net balances of surveyor responses, not percentages of the market.
RICS chief economist Simon Rubinsohn described the market as subdued, with the combination of geopolitics, the domestic political climate and the cost of mortgage finance continuing to weigh on sentiment. But the direction of travel is genuinely more encouraging than it’s been for a while. Near-term sales expectations have now improved for four consecutive months, and 12-month price expectations turned positive for the first time since February.
Average UK mortgage rates this week
Average mortgage rates this week
| Product | This week | Last week | |
|---|---|---|---|
| Two-year fixed | 5.61% | 5.63% | |
| Five-year fixed | 5.64% | 5.67% | |
| Standard Variable Rate | ~7.13% | 7.13% | |
| Bank of England base rate | 3.75% | 3.75% |
Even with this week’s fall, the average two-year fix remains around 9 basis points higher than it was at the start of July, a reminder that one good week doesn’t undo a month of rises on its own.
What to watch next week
What to watch next week
| Monday 18 August, the next ONS labour market release, the first since 21 July | |
| Tuesday 19 August, July's inflation figures, the key data point ahead of the next base rate decision | |
| Thursday 17 September, the next Bank of England base rate decision | |
| Ongoing, swap rates and Middle East developments, which remain the dominant factors behind week-to-week rate movements |
What this means for you
If you’re remortgaging or buying in the next six months, the advice stays consistent: reserve a rate now and keep it under review. Most lenders let you switch to a lower rate before completion, so reserving captures any further falls without the risk of missing out if pricing moves the other way again.
Whichever lender you’re considering, check the whole market before deciding. The gap between this month’s biggest cutters and Halifax’s rate rise shows how quickly the cheapest option can change. A lender that suited you in June may not be the best fit now.
Whatever you do, don’t drift onto the standard variable rate. At 7.13%, against sub-4.7% best buys at lower loan-to-values, it’s comfortably the most expensive place to end up by accident.
Frequently asked questions this week
Did mortgage rates go down this week?
Yes, for the first time in over a month. The average two-year fix fell from 5.63% to 5.61%, and the average five-year fix fell from 5.67% to 5.64% (Moneyfacts, 14 August 2026). Santander, NatWest and HSBC all made significant cuts, though not every lender followed, Halifax raised rates over the same period.
Why did Halifax raise rates while other lenders were cutting?
Halifax's move was widely attributed to managing the volume of new business coming through, rather than a shift in its outlook on the market. It's a reminder that individual lenders can move against the wider trend for reasons unrelated to where rates are generally heading..
Is the UK housing market recovering?
It's stabilising rather than clearly recovering. The RICS July survey showed buyer enquiries and sales activity both still negative, but improving for a fourth consecutive month, with surveyors now expecting prices to be modestly higher, not lower, over the next year.
What is UK GDP growth right now?
The economy grew 0.4% in the second quarter of 2026 (April to June), according to the ONS's first estimate published 13 August. That was in line with expectations, though slightly slower than the 0.6% growth recorded in the previous quarter.
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, Moneyfacts, Nationwide, Financial Conduct Authority, and UK mortgage trade press published 27 to 31 July 2026.
Reviewed by Brennan Goodwin, CeMAP-qualified mortgage adviser at Heron Financial. Last updated: 14th August 2026.