Competition between lenders has led to mortgage rates falling at their fastest pace in nearly two years, according to the Telegraph (13 July 2026). For some homeowners, it could mean their repayments fall.

The article suggests that the average two-year deal has fallen by 0.16 percentage points in July when compared to the previous month, while five-year deals have dropped by 0.11 percentage points. While interest rates are still above where they were at the start of 2026, they are falling at the fastest pace since October 2024. 

The fall is attributed to lenders cutting rates as tensions in the Middle East eased, which had previously driven up the cost of borrowing amid concerns about the long-term economic impact.

The data is welcome news for homeowners who are searching for a new mortgage deal. As a mortgage often involves borrowing large sums, even a small difference to the interest rate could affect your repayments and the total cost of borrowing.

Imagine you’re taking out a new repayment mortgage for £250,000 over a 20-year term. With an interest rate of 4.5%, you’d pay £1,581 a month. Over the full mortgage term, assuming the interest rate stayed the same, you’d pay almost £130,000 in interest. 

Now, if your interest rate fell by just 0.5% to 4%, your monthly repayment would drop to £1,514. Over the full mortgage term, you could pay around £15,000 less in interest. So, when you look at the savings over a long period, they could really add up. 

As mortgage advisers, we could help you find a deal that suits your needs, including comparing different lenders to identify those with a competitive interest rate.

Could I benefit from falling interest rates if I have an existing mortgage deal?

If you already have a mortgage deal in place, whether or not you’d benefit from lenders cutting their interest rate will depend on the type of mortgage you have and your circumstances. 

Variable- and tracker-rate mortgages 

If you have a variable- or tracker-rate mortgage, the interest rate you pay can rise or fall during the mortgage term. As a result, when interest rates fall, you could benefit from lower repayments.

A tracker-rate mortgage will follow the Bank of England (BoE) base rate, while a variable-rate mortgage will depend on the rate set by your lender. Keep in mind that introductory offers for new mortgage deals may be different to the rate you pay as an existing customer. 

Fixed-rate mortgages 

As the name suggests, the interest rate on a fixed-rate mortgage deal is fixed for a defined period, such as two or five years. This provides you with security as you’ll know how much your repayments will be each month. However, when interest rates fall, you don’t immediately benefit. 

Instead, you’ll need to wait until your existing deal ends. Remember, you can usually lock in a new deal up to six months before your current one ends. Typically, if interest rates fall after you’ve locked in the deal but before the new term begins, you’ll be able to cancel it. 

How will interest rates change in the remainder of 2026?

Since 2025, the BoE has gradually decreased the base interest rate as inflation eased. However, there’s no guarantee that this trend will continue.

A range of factors influence the decision to change the interest rate, including inflation, economic performance, and geopolitics. For example, if tensions escalated in the Middle East, the impact on trade could lead to inflation rising. In response to this, the BoE could raise interest rates.

It’s impossible to guarantee how interest rates might change in the future. So, it’s important to feel confident about your ability to meet mortgage repayments, particularly if the interest rate you pay could change.

Get in touch

If you’re searching for a new mortgage deal or have questions about your existing deal, please get in touch.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Approver Quilter Financial Services Limited. 11/08/2026