UK mortgage rates show first weekly decline since February

UK mortgage rates have recorded their first week-on-week decline since 27 February, signalling a potential turning point for borrowers who have faced rates approaching 6% in recent months.

The decline follows the reported reopening of the Strait of Hormuz, which has eased pressure on global markets. Two- and five-year swap rates have fallen below 4% for the first time in a month, according to data from Moneyfactscompare.co.uk.

Market response to geopolitical developments

Adam French, Head of Consumer Finance at Moneyfactscompare.co.uk, said: “Markets have welcomed the reported reopening of the Strait of Hormuz, with two- and five-year swap rates falling back below 4% for the first time in a month.”

“This strengthens the view that mortgage pricing may have peaked, particularly as we’ve seen the first week-on-week fall in average fixed mortgage rates since just before the conflict began,” French added.

The Middle East conflict, which began in late February, has contributed to increased borrowing costs across the UK property market. However, French cautioned that recent volatility demonstrates how quickly pricing can shift. Many lenders are expected to wait for sustained downward trends in funding costs before implementing significant rate reductions, particularly while the peace process remains uncertain.

Impact on buyer activity

The mortgage rate environment has contributed to buyer caution, according to recent market data. Rightmove reported that the average asking price of newly listed homes rose by 0.8%, or £2,929, to £373,971 in April. This increase is below the long-term average for this period.

The property finance sector has seen varied activity in recent weeks, with some specialist lenders maintaining transaction volumes despite broader market uncertainty. Meanwhile, landlord activity has shown signs of stabilisation following earlier volatility.

French noted that borrowers should begin to see selective cuts on fixed deals in the coming days and weeks, though lenders will likely proceed cautiously given ongoing geopolitical uncertainty.

Outlook for borrowers

The decline in average fixed mortgage rates represents the first measurable improvement in borrowing conditions since late February. However, market observers note that sustained reductions will depend on continued stability in global markets and funding costs.

For property investors and homebuyers, the data suggests a potential easing of the challenging borrowing environment that has characterised the first quarter of 2026, though the trajectory of future rate movements remains dependent on broader economic and geopolitical factors.