Lenders don't set mortgage rates in isolation. Every rate is the Bank of England base rate (now 3.75%) plus the lender's funding cost in the swap market plus an LTV-based risk margin. This guide unpacks each piece, in plain English.
Three things set your rate: the 3.75% Bank Rate, the lender's swap-market funding cost, and a margin that rises with your loan-to-value, which is why a 95% deal costs far more than a 75% one.
Trackers
move with the base rate in days
Fixes
priced off the swap curve, not the base rate
SVR
6.60% - never drift onto it
Quoted cells by product family
Exclusive cut of the 6 Bank of England quoted-rate cells in the June 2026 snapshot used throughout this guide.
The policy rate every UK mortgage is priced from · currently 3.75%, set December 2025
The four product types
UK lenders offer four broad product types: fixed-rate mortgages (typically two, five, or ten years), tracker mortgages (priced at base rate plus a margin and floating with every MPC move), discounted variable-rate mortgages (priced at a discount to the lender's SVR for a fixed period), and the standard variable rate (SVR) itself, which is what you fall onto when any of the above expires.
Each passes the base rate through differently. A tracker passes it through within days of an MPC decision, usually one billing cycle. The SVR is a managed rate the lender adjusts at its discretion, typically following base-rate moves with a one-to-three month lag. Fixed-rate deals do not move at all during the fix period, they are priced once at offer and held until the fix expires. New fixed-rate deals for new customers move with the swap-rate curve, not directly with the base rate.
Why the swap curve matters more than the base rate for fixes
When a lender writes a five-year fixed-rate mortgage, it does not simply lend out customer deposits at the base rate, that would leave it exposed if interest rates rose during the fix. Instead it enters a five-year interest-rate swap, paying a fixed rate for five years in exchange for the floating overnight rate. The fixed leg of that swap is the lender's funding cost; everything on top is margin, capital cost, and credit-risk premium.
This is why fixed-rate mortgages can get cheaper or dearer even when the base rate is unchanged. If market expectations of future base-rate moves shift, the swap curve shifts immediately, and new fixed-rate offers follow within days. Existing fixed-rate borrowers see no change until their fix expires.
The Sterling Overnight Index Average (SONIA) curve is the canonical reference. As of June 2026 the gap between the average two-year and five-year fixed deals at 75% LTV was only about 16 basis points, a sign of a relatively flat rate-expectations curve.
Loan-to-value bands and risk pricing
Every UK lender prices its range by loan-to-value band. A 75% LTV deal is cheaper than a 95% deal because the lender's loss-given-default in any reasonable house-price scenario is far lower, and because higher-LTV loans require materially more regulatory capital, a cost passed straight through to the headline rate. The LTV that matters is the one at application; a borrower at 90% today can remortgage at 75% once they have repaid principal and the property has appreciated, usually saving a meaningful margin on the next deal.
UK mortgage rate snapshot, by LTV
Bank of England quoted household averages, June 2026. These update with each monthly BoE release, they are not a hardcoded table.
LTV band
2-year fix
5-year fix
Who it's for
75% LTV
4.81%
4.65%
Move-up buyers, 25%+ deposit
90% LTV
4.76%
-
First-time buyers, 10% deposit
95% LTV
5.19%
5.18%
High-LTV, small deposit
How the base rate transmits through the system
When the Monetary Policy Committee changes the Bank Rate, transmission to retail mortgage rates plays out in distinct timeframes. Tracker mortgages reprice within one billing cycle, usually a single calendar month. Standard variable rates are repriced by the lender, typically with one to three months of lag and not always one-for-one. New fixed-rate deals reprice within weeks because the swap curve moves immediately on MPC decisions.
A 25-basis-point base-rate change translates into roughly £14 per month on each £100,000 of outstanding mortgage on a 25-year repayment basis. A household with a £200,000 tracker sees its monthly payment move by about £28 within a month of a quarter-point change.
Frequently asked questions
Why is my SVR so much higher than the base rate?
The standard variable rate is the lender's open-ended default rate, set high enough that borrowers move to a new product rather than sit on it. The current average SVR is 6.60% - about 2.8 percentage points above the 3.75% Bank Rate. Lenders use the SVR to cover their highest-cost legacy funding, regulatory capital on uncommitted lending, and to nudge customers to remortgage onto a new product.
When the base rate is cut, do fixed-rate deals get cheaper immediately?
New fixed-rate offers for new customers get cheaper within days, because the swap curve moves immediately on MPC decisions. Existing fixed-rate borrowers see no change, they are locked into the contracted rate until the fix expires. If you are coming to the end of a fix, watch the swap curve in the weeks before you apply: it is the leading indicator of where new fixed offers will price.
Are tracker rates always cheaper than fixed rates?
No. Trackers are typically cheaper when the market expects the base rate to fall, because the floating element captures future cuts. They are more expensive when the market expects rises, because fixed-rate offers already price those rises in. The shape of the swap curve is the giveaway: a downward-sloping curve favours trackers; an upward-sloping curve favours fixes.
Why do some lenders advertise rates well below the average?
An advertised best-buy rate is typically the lender's most-favourable LTV band, with a substantial arrangement fee folded in, aimed at the strongest-credit borrower. The figures on this site are the Bank of England's published market averages, not best-buy headlines, the rate you are actually offered after a full credit assessment can be higher or lower than either.
How often do mortgage rates change?
Lenders reprice whenever the swap curve moves meaningfully, in practice somewhere between weekly and monthly in normal conditions. After an MPC decision or major economic surprise, a lender can withdraw and reprice an entire range overnight. The Bank of England's quoted-rate series, used here, is a monthly average that smooths this churn.
What is a Decision in Principle and how is it different from a binding offer?
A Decision in Principle (DIP) is a soft-pull credit check plus a basic affordability assessment that tells you whether a lender would, in principle, lend the amount you want. It is not binding. A binding offer comes after full underwriting, valuation, document verification, and a full credit pull, and is locked in subject to conditions.
PlainMortgage is an information service, not a regulated financial adviser, see the about page for the full disclosure. Rates and the base rate are loaded directly from the Bank of England; see the methodology.
According to the Bank of England and HM Land Registry, whose House Price Index is compiled from more than 1,000,000 registered property transactions a year, the figures referenced on this page draw on the June 2026 Bank of England quoted-rate snapshot and the April 2026 House Price Index release under the Open Government Licence. Our methodology records each series and refresh cadence.