London, May 21, 2026, 09:15 BST
UK mortgage lenders are split again. NatWest will hike some rates from Thursday, while Barclays and Santander are cutting some products. The moves show lenders are still responding to choppy funding costs, not the Bank of England’s steady base rate.
The split is important as a big refinancing wave has started. UK Finance expects 1.8 million fixed-rate mortgages, where borrowers have a set interest rate for a period, will end in 2026. That will push households to choose whether to lock in a deal now or gamble on how the market moves.
Inflation cooled, giving some relief to borrowers, but markets remained unsettled. The Office for National Statistics said the Consumer Prices Index rose 2.8% in the 12 months to April, easing from 3.3% in March. Core CPI, which strips out energy, food, alcohol and tobacco, slowed to 2.5%.
Bank Rate is still at 3.75%, with the Bank of England expected to make its next call on rates on June 18. The Bank said that higher rates usually push up mortgage and loan payments, squeezing how much households have left to spend.
NatWest lifted selected mortgage rates by up to 24 basis points. The fee-free two-year fixed deal at 90% loan-to-value moved up to 5.56% from 5.33%. A similar deal at 95% LTV increased to 5.70%. The new rates start from May 21.
Barclays went the other direction on parts of its mortgage range, cutting some high-LTV products. Its fee-free two-year fixed deal at 95% LTV dropped to 5.50%. Santander said it will lower some first-time buyer rates at 85%, 90%, and 95% LTV by up to 0.23% from May 22. Some homemover and remortgage rates will also come down.
Sticky mortgage rates. Rightmove’s tracker as of May 20 put the average two-year fixed at 5.14% and the five-year fix at 5.15%, both just 0.02 percentage points lower than a week ago. Matt Smith at Rightmove said lenders are holding back, with swap rates — used to price fixed mortgages — staying sensitive to geopolitical risk.
April’s dip in inflation is a positive sign, but “borrowers can’t afford to relax,” David Hollingworth, associate director at L&C Mortgages, said. L&C’s tracker put the top 10 lenders’ average best two-year remortgage fixed rate at 4.78%, now the lowest since late March. Still, Hollingworth said there are fewer rate cuts coming through. Mortgage Solutions
Mortgage market is still “highly reactive” to shocks, Caitlyn Eastell at Moneyfactscompare.co.uk said. She warned that borrowers rolling off five-year ultra-low fixes are likely to see repayments jump by over £5,400 a year. Mortgage Solutions
Bank of England Governor Andrew Bailey said higher market rates and rising mortgage costs had tightened financial conditions, giving the central bank more time to see what effect the Iran war will have on the economy. Bailey was speaking to lawmakers. Markets are still pricing in at least two quarter-point rate hikes this year, according to Reuters.
UK housing data came in soft. The average house price was flat at £268,000 in the year to March, compared to a 1.7% rise in February. Private rents, though, gained 3.5% in the year to April. Flat prices may help buyers on the edge, but costly loans are still the main problem for affordability.
UK mortgage approvals hit a four-month high in March, with lenders signing off on 63,531 house purchase loans. Demand has not dropped, but Rob Wood at Pantheon Macroeconomics expects higher borrowing costs may hold house price inflation to just 1.0% by the fourth quarter.
But there’s risk on either side. If energy prices fall and markets pull back rate hike bets for the Bank of England, lenders might keep cutting. But if swap rates stick at these levels or another inflation shock comes through, the recent cuts could vanish fast. Tracker mortgages still look cheaper up front since they follow Bank Rate, but they leave borrowers open to any move higher.
