Mortgage Rates Climb Again in August Despite the Rate Hold

By Lisa Hayes · 3 August 2026

The Bank of England left the base rate frozen at 3.75% on 30 July, and plenty of headlines treated that as good news for anyone with a mortgage. Look at what lenders are actually doing, though, and the picture is less comforting. Fixed mortgage rates have crept back up through late July and into August, and the money markets are no longer betting on the next move being a cut. If you're weighing up whether to sell this year, that shift matters more than the frozen headline rate.

What has actually happened to mortgage rates?

Here's the bit the "rates held" headlines skip over. The base rate the Bank of England sets and the fixed rate a lender offers you are two different animals, and this summer they've been pulling in opposite directions.

According to the financial data firm Moneyfacts, the average two-year fixed-rate mortgage stood at 5.62% on 28 July, up from 5.48% at the start of that month. The average five-year fix was sitting at roughly 5.61%. Those aren't dramatic jumps on their own. But the direction is what counts: after falling sharply through June, rates turned around and started climbing again just as the Bank was preparing to hold.

Then, in the first days of August, several big names pushed their fixed deals up. Nationwide, NatWest and Barclays all repriced. When lenders of that size move together, smaller lenders tend to follow, because nobody wants to be left as the cheapest deal in the market and get buried under applications they can't process fast enough.

So the reality on the ground is this. The Bank held. Your borrowing costs, if you're remortgaging or buying, still went up. If that feels contradictory, you're not misreading it — the two things really can happen at the same time, and this is one of those moments.

• 3.75%Bank of England base rate (held 30 July)
• 5.62%average two-year fixed rate, 28 July (Moneyfacts)
• 1.8%annual house price growth in July (Nationwide)
• £277,542average UK house price in July (Nationwide)

How did we get here?

It's worth a quick rewind, because the mood has flipped fast. Through the spring, the story was cautiously hopeful: inflation was drifting down, the Bank had been trimming rates, and fixed mortgage deals fell sharply through June as lenders competed for business. For a few weeks it genuinely looked like the back half of 2026 would bring cheaper borrowing.

Then renewed conflict in the Middle East pushed energy prices back up and rattled the markets that set mortgage pricing. Inflation expectations firmed. Swap rates turned. And the deals that had been getting cheaper started getting dearer again — first a trickle of small lenders, then the big high-street names. The base-rate hold on 30 July landed right in the middle of that turn, which is exactly why it hasn't delivered the relief the headline implies.

Didn't the Bank of England just hold rates to help borrowers?

It held rates, yes. Whether that was to "help borrowers" is a different question, and the vote tells you a lot.

The nine-member Monetary Policy Committee split six to three. The three dissenters — Megan Greene, Catherine Mann and Huw Pill — didn't want a hold at all. They wanted to raise the base rate to 4%, worried about energy prices and inflation that won't quite lie down. That's a striking thing to see in mid-2026. For most of the past year the argument inside the Bank was about how fast to cut. Now a third of the committee is arguing to go the other way.

Markets watch that vote split closely, and they price it in. When traders see three members pushing for a rise, they quietly rebuild their own bets. Not long ago the money markets expected two rate cuts before the end of 2026. Those expectations have thinned right out. A hold, in other words, isn't the same as relief. It can be a pause on the way up just as easily as a pause on the way down, and right now the balance of risk has tilted.

If you want the plain-English version of the terms flying around in coverage like this — base rate, swap rate, fixed versus tracker — our property jargon explained guide unpacks them without the waffle.

Why are fixed rates rising when the base rate is frozen?

This is the part worth understanding properly, because it's the key to the whole story. Fixed-rate mortgages aren't priced off the Bank of England base rate. They're priced off swap rates — the rates at which banks lend to each other over a fixed period, which in turn reflect where the market thinks interest rates are heading over the next two, five or ten years.

When swap rates rise, it costs lenders more to fund a fixed deal, so they push their mortgage rates up to protect their margins. And swap rates have been jittery. Robert Gardner, Nationwide's chief economist, put his finger on why when the July index landed. "Geopolitical tensions remain high," he said, "with the conflict between Iran and the US again exerting upward pressure on energy prices and market interest rates in recent weeks. Financial market expectations for the future path of Bank Rate have been volatile."

Volatile is the operative word. Energy prices feed straight into inflation expectations. Higher inflation expectations push swap rates up. Higher swap rates push fixed mortgage rates up — regardless of what the Bank does at any single meeting. That's the chain, and it explains how you can get a frozen base rate and dearer mortgages in the very same week.

There is a sliver of comfort in Gardner's read of it. He noted that consumer price inflation "declined further in June" and that wage growth has kept easing, which "gives policymakers more breathing space." So the inflation picture isn't all bad. But breathing space is not the same as a green light, and lenders are pricing for the risks, not the hopes.

The numbers at a glance

Measure	Latest	Previous / context
Bank of England base rate	3.75% (held 30 Jul)	Vote 6–3; three wanted 4%
Average two-year fixed rate	5.62% (28 Jul)	5.48% at start of July
Average five-year fixed rate	~5.61%	Edging up with two-year
Nationwide annual price growth	1.8% (Jul)	2.2% in June
Average UK house price	£277,542	£277,484 in June
Mortgage approvals for house purchase	58,200 (Jun)	Below ~61,400 six-month average

Sources: Bank of England, Moneyfacts, Nationwide. Figures as reported late July / early August 2026.

What the July house price figures add to the story

Rates don't move in a vacuum, and the latest house price data shows where all this pressure is landing. Nationwide's July index had UK annual house price growth slowing to 1.8%, down from 2.2% in June. Prices nudged up just 0.1% on the month once you strip out seasonal quirks. The average home came in at £277,542, barely changed from June's £277,484.

Read that plainly: prices aren't falling, but they've more or less stopped rising. Gardner described market activity and house prices as having "remained soft in recent months." Soft is a fair word. This is a market treading water, not sinking, and not floating up either.

That fits the affordability squeeze perfectly. When a buyer's mortgage costs more, the amount they can offer for your home comes down, whatever the asking prices around you suggest. A market where borrowing is getting dearer is a market where prices struggle to climb. You're seeing that play out in real time. For the longer view on how values have moved, our regularly updated UK house prices tracker is worth a look.

Is this the same story everywhere in the UK?

No — and this is where the national average hides as much as it reveals. The "UK house price" figure is a blend of markets that are pulling in genuinely different directions.

On Nationwide's most recent regional breakdown, covering the second quarter of 2026, Northern Ireland was comfortably the strongest performer, with prices up around 8.6% year on year. At the other end, the Outer South East was the weakest, barely positive at roughly 0.1%. That's an enormous spread. A homeowner in Belfast and a homeowner in the commuter belt around London are, in effect, selling in two different economies.

Why does that matter to you? Because a single national headline like "growth slows to 1.8%" tells you almost nothing about your own street. If you're in a region that's still rising, you have more room to hold firm on price. If you're in a softer patch, the case for pricing realistically and moving decisively is even stronger. Local reality beats the national average every time. It's worth checking how your specific area is behaving before you settle on a figure, rather than leaning on a number that averages Belfast and Basingstoke into one.

What's happening with buyer activity?

The lending data rounds out the picture. Bank of England figures showed mortgage approvals for house purchase rose to 58,200 in June, up from 56,565 in May and a touch above what economists had pencilled in. On the face of it, that's a small positive.

Dig in, though, and it's more muted. That 58,200 still sits below the roughly 61,400 six-month average, and it's down around 10% on the same month a year earlier, when approvals ran closer to 64,700. Meanwhile the "effective" interest rate actually paid on newly drawn mortgages ticked up to 4.35% in June, from 4.22% the month before. So more people are buying than in the spring, but they're buying at rates that keep grinding higher, and there are fewer of them about than there were a year ago.

For a seller, the takeaway is uncomfortable but useful: your pool of buyers is thinner and more cautious than it was, and every one of them is doing sums that get tighter each time a lender reprices. That's the crowd you're pitching to. It rewards homes that are priced fairly and presented well, and it quietly penalises anything that looks like it's testing the water.

What about existing owners and remortgaging?

This isn't only a story for people buying and selling. If you already own and you're coming off a fixed deal, the same forces are heading your way — and for a lot of households, this is where the pinch is sharpest.

Bank of England data showed remortgage approvals edging up to 34,200 in June, a sign that plenty of owners are being pushed to refinance whether they like the timing or not. The rate they're refinancing onto is the problem. The effective interest rate on the outstanding stock of mortgages rose to 3.96% in June, from 3.92% the month before, and on brand-new lending it hit 4.35%. Anyone rolling off a cheap fixed deal agreed a few years ago is stepping onto a considerably higher rung.

For some owners, that jump in monthly payments is the very thing prompting a "should we just sell and downsize?" conversation at the kitchen table. If that's you, don't let the frozen base rate talk you into thinking the pressure will quietly lift. The market rate you'd actually remortgage onto is what hits your bank balance, and it's been climbing. Understanding your options early — remortgage, sell, or downsize — beats being forced into a rushed decision when your current deal expires.

What does this mean if you're thinking of selling?

Let me be direct, because vague reassurance doesn't help you price a house. If you're planning to sell in the next few months, the rate story is a headwind, not a tailwind. Higher mortgage rates shrink what buyers can borrow, and a market where growth has flattened to 1.8% a year is a market with no momentum to bail out an over-ambitious asking price.

None of that means don't sell. Homes are selling. It means sell with your eyes open. The single biggest mistake in a market like this is anchoring your asking price to what your neighbour got in 2024, or to a bullish valuation that assumes buyers have deeper pockets than they do. They don't. Their lender just made sure of that.

Price to today's market and you'll find a buyer. Price to last year's and you'll sit. The homes that move in a flat market are the ones that look like fair value on day one — not the ones that start high and chase the market down with a string of reductions, which is the slowest and most expensive way to sell there is. Before you set a figure, it's worth getting a grounded sense of what your place is actually worth now with a proper home valuation rather than a hopeful guess.

What should you do now?

A few practical moves, depending on where you stand. First, a mindset point: don't wait for the market to "tell you" it's the right time by rising. In a flat market it won't, and the cost of hanging on for a rebound that may not come is real — mortgage rates could just as easily be higher when you finally list. Decide based on your own circumstances and a clear-eyed valuation, then act.

If you're chain-free and need certainty on timing, a flat, rate-pressured market is exactly when speed and certainty are worth real money. A sale that completes in weeks removes the risk of your buyer's mortgage offer being pulled or repriced before exchange — a genuine hazard when lenders are moving rates around. If that's your priority, it's worth understanding how to sell your house fast and what the trade-offs are.

If you value speed above squeezing out the last few thousand pounds, a cash sale takes mortgage availability out of the equation entirely, because your buyer isn't borrowing. That matters more than usual right now, with approvals down year on year and offers more fragile. Our guide to cash house buyers walks through how it works, what you typically give up on price, and how to avoid the sharks.

If you're not in a rush, you have the luxury of pricing keenly and waiting for the right buyer, while keeping half an eye on the September rate decision. Just don't confuse "not in a rush" with "price it high and see." A stale listing costs you far more than a realistic one.

Whatever route suits you, the smart first step is the same: find out what your home is genuinely worth today, and compare what different types of buyer would actually pay for it.

Will mortgage rates fall later this year?

Honestly? Nobody can promise you that, and be wary of anyone who does. The next scheduled Monetary Policy Committee decision is 17 September, and that's the moment to watch. If inflation keeps cooling and the energy shock fades, the doves on the committee regain the upper hand and a cut comes back into view, which would eventually feed through to cheaper fixed deals. If energy prices stay high and inflation proves sticky, the three members who wanted 4% this time may win more converts.

That's a real fork in the road, not a formality. The one thing that looks clear is that the era of everyone assuming rates only go down is over for now. Markets have swung from pricing two cuts this year to seriously weighing a rise. For a seller, planning your move around a rate cut that may not arrive is a gamble. Planning around the market as it actually is today — flat prices, cautious buyers, rates edging up — is just sensible.

Selling decisions shouldn't hang on second-guessing the Bank of England anyway. They should hang on your own timeline, your equity, and a fair, current read of what your home will fetch. Get those right and the September headline becomes something you note, not something you're at the mercy of.

The bottom line

The base rate held, but the story underneath is that borrowing got a little dearer, buyers got a little more cautious, and the market lost what small momentum it had. That's not a crisis. It's a market that rewards realism and punishes wishful thinking. If you're selling, price to the buyers who exist today, keep an eye on 17 September, and don't let a "rates held" headline lull you into thinking the pressure's off — it isn't. The sellers who do well from here won't be the ones who guessed the rate cycle right. They'll be the ones who priced honestly, moved with intent, and matched their sale to a buyer who could actually complete.

If you'd like to see what your home is worth in this market, and compare genuine offers from different types of buyer side by side, you can start a free, no-obligation valuation and make your decision on facts rather than headlines.