What Happens Next ?
The Bank of England has kept the Base Rate at 3.75%, balancing easing inflation against concerns that rising energy costs could push inflation higher later this year. While fixed mortgage rates don’t move directly with the Base Rate, this decision provides greater market stability.
Inflation is expected to rise slightly before easing again, meaning the Bank of England is likely to remain cautious on future rate decisions. Meanwhile, the housing market continues to show resilience, with house prices remaining broadly stable despite affordability pressures.
Looking ahead, the outlook for the rest of 2026 is one of cautious optimism. Most economists expect interest rates to remain relatively stable unless inflation changes significantly. Although borrowing costs remain elevated, choosing the right mortgage product has never been more important.
Why Have Swap Rates and Mortgage Rates Changed
Although the Bank of England held the Base Rate steady, swap rates—which lenders use to price fixed-rate mortgages—have risen over the past two weeks. This reflects growing concerns that inflation may remain higher for longer, driven by rising energy costs, persistent wage growth and ongoing geopolitical uncertainty. As swap rates are based on future expectations, they often move ahead of Bank of England decisions.
Despite this, two-year fixed mortgages remain among the most competitively priced deals available. Strong competition between lenders and expectations that inflation will gradually ease mean shorter-term rates continue to offer good value. For many borrowers, this presents an excellent opportunity to secure a competitive deal while retaining the flexibility to review their mortgage sooner should rates fall.
31st June Swaps
19th June Swaps
Why a Short Term Deal Could Be the Right Choice
Don’t just choose the cheapest rate today
Choose the mortgage that leaves you best placed for tomorrow
If you’re looking for certainty without committing for too long, a two-year fixed rate could be the right choice. Mortgage rates are still relatively high by historical standards, and many economists expect them to ease over the next couple of years as inflation continues to fall.
By fixing for two years, you can enjoy the security of knowing exactly what your monthly payments will be, while keeping the flexibility to review your mortgage sooner. If rates do fall, you’ll be in a better position to benefit rather than being locked into today’s higher rates for five years or more.
As always, the right choice depends on your individual circumstances, which is why taking professional mortgage advice is so important. If your mortgage deal ends within the next 6 months, it may be sensible to review your options now. Securing a rate early can provide protection if lenders increase pricing further. At IMDNE, we continually monitor lender rates right up until completion. If a lower rate becomes available, we automatically secure the improved deal, ensuring you never miss out on better terms.
You can also use our online mortgage sourcing tool to check the latest deals available. The system provides real-time mortgage results, allowing you to compare products based on your own circumstances before deciding whether to take advice or secure a rate. This can be particularly useful if your current mortgage deal is ending soon, or if you want to understand how recent market movements may affect your borrowing options.
