2026 UK Mortgage Guide — Rates, Types & Repayment Calculator
Published: 2026-03-26
The Bank of England held its base rate at 3.75% on 20 March 2026, with the MPC voting unanimously to hold. Average mortgage rates remain elevated compared to the ultra-low rates of 2020–2021, with 2-year fixed deals averaging 4.76% and 5-year fixed deals at 4.86%. This guide covers everything you need to know about UK mortgages in 2026.
1. Current Mortgage Rates (March 2026)
| Mortgage Type | Average Rate | Best Available |
|---|---|---|
| 2-Year Fixed | 4.76% | ~3.90% |
| 5-Year Fixed | 4.86% | ~4.10% |
| Tracker (base + 0.60%) | 4.35% | ~4.15% |
| Standard Variable Rate (SVR) | 7.50%+ | — |
The BoE base rate has held at 3.75% since December 2025. Markets currently expect the rate to remain at this level through 2026 due to oil price pressures from the Middle East conflict. Borrowers on tracker mortgages see direct benefits from any future cuts.
2. Types of UK Mortgages
| Type | How It Works | Best For |
|---|---|---|
| Fixed Rate | Rate locked for 2–5 years | Payment certainty, budgeting |
| Tracker | BoE base rate + margin | Expecting rate cuts |
| SVR (Standard Variable) | Lender's own rate | Avoid — usually expensive |
| Discount Variable | Discount on lender's SVR | Short-term savings |
| Offset | Savings offset against mortgage | Significant cash savings |
3. Repayment vs Interest-Only
With a repayment mortgage, each monthly payment covers both interest and a portion of the loan. By the end of the term, the mortgage is fully paid off. With an interest-only mortgage, you only pay the interest each month and must repay the full capital at the end.
£250,000 mortgage at 4.86% (5-year fixed), 25-year term:
Repayment: £1,434/month
Interest-only: £1,013/month
Difference: £421/month, but you owe £250,000 at the end with IO
Interest-only mortgages are harder to obtain since the 2008 financial crisis. Lenders require a credible repayment strategy (investments, property sale, pension lump sum) and typically require lower LTV ratios.
4. Loan-to-Value (LTV) Tiers
LTV is the percentage of the property value you are borrowing. The lower your LTV, the better rates you can access:
| LTV | Deposit | Typical Rate Premium |
|---|---|---|
| 60% or less | 40%+ | Best rates available |
| 75% | 25% | +0.1–0.2% |
| 85% | 15% | +0.3–0.5% |
| 90% | 10% | +0.5–0.8% |
| 95% | 5% | +0.8–1.2% |
Calculate your UK mortgage repayments
Enter your property price, deposit, and interest rate to see your exact monthly repayment.
UK Mortgage Calculator →5. Typical Repayment Examples
Monthly repayment amounts (capital repayment, 25-year term) at the average 5-year fixed rate of 4.86%:
| Mortgage Amount | Monthly Repayment | Total Interest (25 years) |
|---|---|---|
| £150,000 | £860 | £108,000 |
| £200,000 | £1,147 | £144,100 |
| £250,000 | £1,434 | £180,200 |
| £350,000 | £2,008 | £252,400 |
| £500,000 | £2,868 | £360,400 |
6. Government Schemes for Buyers
- Lifetime ISA (LISA): Save up to £4,000/year with a 25% government bonus (£1,000/year) toward your first home (max property value £450,000).
- Shared Ownership: Buy a 25–75% share of a property and pay rent on the rest. Available through housing associations.
- Mortgage Guarantee Scheme: Government-backed 95% LTV mortgages from participating lenders, extended through June 2025.
- First Homes Scheme: New-build homes sold at a 30–50% discount to local first-time buyers in England.
7. Remortgaging: When and Why
When your initial fixed or tracker deal ends, you typically revert to the lender's SVR (currently around 7.5%+). Remortgaging to a new deal before this happens can save hundreds of pounds per month.
- Start looking 3–6 months before your deal ends
- Most new deals can be reserved up to 6 months in advance
- Compare arrangement fees vs rate — a slightly higher rate with no fee may cost less overall
- Consider your remaining balance and LTV tier when shopping for rates
Calculate your UK mortgage repayment:
UK Mortgage Calculator →Sources: Bank of England, FCA, MoneySavingExpert, GOV.UK "Help to Buy" and "Lifetime ISA" guidance.
Frequently Asked Questions
What is the Bank of England base rate in March 2026?
The Bank of England held the base rate at 3.75% on 20 March 2026, with the MPC voting unanimously to hold. Markets expect the rate to remain at 3.75% through 2026 due to geopolitical uncertainty and oil price pressures.
Should I choose a fixed or tracker mortgage in 2026?
Fixed rates offer certainty — your payments stay the same regardless of base rate changes. Tracker rates are currently lower than fixed rates (base + 0.60% = 4.35%) but will rise if the BoE increases the base rate. Choose fixed for security, or tracker if you believe rates will fall.
What happens when my fixed rate ends?
When your fixed rate period ends, you will revert to the lender's Standard Variable Rate (SVR), which is typically 7.5% or more — significantly higher than any deal rate. Start looking for a new deal 3–6 months before your fix ends to avoid paying SVR. Most lenders allow you to lock in a new rate months in advance.