Bank Rate Held at 3.75% — Why Mortgage Rates Are Still Falling Anyway

The Bank of England held Bank Rate at 3.75% at its June meeting, and markets currently expect it to do the same again at the next Monetary Policy Committee decision on 30 July 2026. Yet oddly, mortgage rates have been falling in the background — a mini price war that's worth understanding if you're due to remortgage.

Why rates are dropping without a Bank Rate cut

Mortgage pricing doesn't track Bank Rate directly — it tracks swap rates, which reflect where lenders think interest rates are heading over the next two to five years. Falling swap rates have triggered lenders to cut fixed rates by up to 0.26% in a single week recently, even with the base rate unmoved. It's competition for market share as much as a response to the Bank.

Right now, average fixed rates sit at 5.68% for two-year deals and 5.63% for five-year deals, but the best available deals are considerably cheaper: Halifax's lowest tracker is at 3.96%, Monmouthshire Building Society offers 4.44% on a two-year fix for remortgages, and HSBC has a five-year remortgage fix at 4.46%, according to Which?'s tracked best-buy tables.

What's driving the uncertainty

Inflation stood at 2.8% in May 2026, and the Bank of England has flagged Middle East conflict as a live risk to energy prices, which feeds directly into the inflation outlook and therefore rate decisions. The FTSE 100 has itself been reacting to shipping disruption in the Strait of Hormuz pushing crude oil prices up. It's a reminder that mortgage pricing is downstream of global events, not just domestic policy.

On the housing side, the Lloyds house price index recorded its first monthly gain in four months in June, up 0.2%, which some analysts attribute directly to easing mortgage costs feeding through to buyer demand.

What this means if you're remortgaging

• If your current deal ends in the next six months, get a mortgage offer locked in now — most offers are valid for three to six months and you can switch to a cheaper deal before completion if rates fall further
• Compare whole-of-market rates rather than just your existing lender's retention offer
• Factor in that "average" advertised rates are well above the best available deals if you have strong equity or a clean credit history

International comparison

The UK's 3.75% Bank Rate compares with the US Federal Reserve's target range and the European Central Bank's deposit rate, both of which have followed broadly similar post-inflation-shock paths of holding rates high before gradual cuts. Unlike the US, where 30-year fixed mortgages are standard, UK borrowers overwhelmingly remortgage every two to five years, making them far more exposed to short-term rate swings.

Key Numbers

• 3.75% — Bank Rate held at the June 2026 meeting
• 30 July 2026 — next MPC decision date
• 5.68% / 5.63% — average 2-year and 5-year fixed mortgage rates
• 2.8% — UK inflation, May 2026

Sources

• Bank of England: Interest rates and Bank Rate
• Uswitch: UK mortgage rates today
• Which?: Best mortgage rates & deals July 2026

Educational content only — not financial advice.