Average Mortgage Rates Rose in June Despite Base Rate Holding Steady

Mortgage holders have been given a fresh warning over borrowing costs after the average rate paid on newly agreed home loans increased in June. The latest Bank of England figures come as almost 1.8 million mortgage deals are expected to expire in 2026, meaning a significant number of homeowners will soon be shopping for new rates. The data serves as a reminder that mortgage rates don't move in lockstep with the Bank of England's base rate—and that lender pricing can shift based on their own funding costs and appetite for new business.

What the Bank of England data shows

According to the Bank of England's monthly lending statistics, the average interest rate on newly agreed mortgages rose in June 2026, even though the base rate has been held at 4.5 per cent since earlier this year. This upward movement in mortgage rates reflects the fact that high street lenders set their own pricing based on a range of factors, including the cost of raising funds in the wholesale money markets, competition for deposits, and their own risk appetite. While base rate cuts typically lead to cheaper mortgage deals over time, the relationship isn't automatic—and lenders can raise rates even when the base rate stays flat.

The timing is particularly significant because nearly 1.8 million fixed-rate mortgage deals are due to expire this year. Many of these borrowers locked in rates during the ultra-low interest rate environment of 2020 and 2021, when two-year and five-year fixes were available well below 2 per cent. Those homeowners will face a substantial jump in monthly payments when they remortgage, even if rates improve slightly between now and the end of the year.

Why mortgage rates rose in June

Mortgage lenders don't simply pass on the Bank of England base rate to customers. Instead, they price their products based on swap rates—the cost at which banks lend to each other over fixed periods—as well as their own operating costs and profit margins. Swap rates are influenced by expectations of where the base rate will go in future, not just where it sits today. If markets expect the Bank of England to keep rates higher for longer, or even to raise them again, swap rates can rise and pull mortgage rates up with them.

In addition, lenders adjust their rates depending on how much new business they want to attract. If a bank has already met its lending targets for the month, it may raise rates to slow demand. Conversely, a lender looking to grow market share might cut rates to bring in more customers. This is why you'll often see significant variation in mortgage rates between providers at any given time, and why it's so important to compare the whole market rather than sticking with your existing lender.

The remortgage challenge ahead

For the 1.8 million households whose fixed deals are ending this year, the rise in rates adds urgency to the remortgaging process. Many will be moving from rates below 2 per cent to deals closer to 4 or 5 per cent, which can add hundreds of pounds to monthly payments. A borrower with a £200,000 mortgage moving from a 1.5 per cent rate to a 4.5 per cent rate, for example, would see their monthly payment rise by roughly £350—a significant hit to household budgets already stretched by higher energy and food costs.

The good news is that most lenders allow you to secure a new rate up to six months before your current deal ends, and you can usually switch to a better deal if rates fall before completion. This means you can lock in today's rates while still having the flexibility to move if the market improves. It's worth acting sooner rather than later, particularly if rates continue to edge upward as they did in June.

What this means for you

If your fixed-rate mortgage is due to expire in the coming months, now is the time to start exploring your options. Even if you're not remortgaging until later in the year, comparing rates and speaking to a mortgage broker now will give you a clear sense of what's available and help you budget for the change. Remember, you're not obliged to stay with your current lender—shopping around can often save you thousands of pounds over the life of your mortgage. A whole-of-market broker can search hundreds of deals on your behalf and guide you through the application process.

For those already on a variable rate or coming to the end of an old tracker deal, the same advice applies. Even if the Bank of England does cut the base rate later this year, the most competitive fixed deals may still offer better value and certainty than waiting on a variable rate. The key is to act early, compare widely, and make sure you're getting the best deal for your circumstances—not just the one your existing lender happens to offer you when your deal ends.