Last week we promised we'd cover the Bank of England's July decision, and it came on Thursday. The headline is "nothing changed", but the detail behind it matters for anyone with a mortgage. Here's the plain-English version of the week.
The Bank holds at 3.75%, but three members wanted a rise Confirmed
On Thursday 30 July, the Bank of England's Monetary Policy Committee voted to keep the base rate at 3.75%, the fifth meeting in a row it has stayed there. So far, so unexciting. The interesting part is the vote: it was 6 to 3, with three members, Megan Greene, Catherine Mann and Huw Pill, voting to raise the rate to 4%.
Why does the vote matter more than the decision? Because the direction of travel has shifted. In April the vote to hold was 8 to 1. In June it was 7 to 2. Now it's 6 to 3. Meeting by meeting, the group arguing for higher rates has grown, and at the start of this year most forecasters were debating when the next cut would come, not whether a rise was on the cards. The dissenters' worry is the knock-on effect of higher energy prices, which have stayed volatile because of the ongoing Middle East conflict, feeding through into other prices.
Alongside the decision, the Bank published its latest forecast: it now expects inflation to peak at around 3.2% towards the end of 2026 before easing back. For context, inflation was 2.6% in the year to June, so the Bank is telling us it expects the cost-of-living squeeze to get modestly worse before it gets better. The next base-rate decision is on 17 September.
What it means for you: if you're on a tracker or your lender's standard variable rate, nothing changes this month, your payment stays where it is. If you're on a fix, your rate was never linked to Thursday's decision anyway. The real message is for anyone whose deal ends in the next six to twelve months: the comfortable assumption that "rates will drift down and I can wait" is looking shakier than it did in the spring. Our guide to what happens when your fixed rate ends walks through your options.
Fixed rates crept up again this week Confirmed
And that shift in mood is exactly what the mortgage market has been pricing in. According to Moneyfacts, the average two-year fixed rate rose from 5.46% on 14 July to 5.62% by 28 July, with the average five-year fix up from 5.48% to 5.64% over the same fortnight. In the final week of July, Halifax, HSBC, TSB, Nationwide and BM Solutions were among the big names announcing further increases.
Regular readers will know the mechanics by now: fixed mortgage rates are priced off swap rates, the market's bet on where interest rates are heading, not off the base rate directly. With markets now taking the possibility of a base-rate rise seriously (see above), swap rates have climbed, and lenders have repriced to match. The two-year swap rate reached about 4.26% in late July, up from roughly 4% a month earlier.
It's worth keeping perspective, though. The averages include every deal at every deposit size; the best buys are still well below them, with leading five-year fixes around the mid-4s for borrowers with plenty of equity. Rates have moved in both directions several times this year, and they can fall as quickly as they rise if the news flow improves.
What it means for you: the same practical advice we gave last week, only with a little more urgency. If your deal ends within about six months, most lenders will let you reserve a rate now, and switch to something cheaper before completion if rates fall in the meantime. That's protection against further rises with none of the downside. Run the numbers on our repayment calculator, or see the remortgage guide for the stay-or-switch decision.
House price growth slows to 1.8%, and we're all staying put longer Confirmed
Nationwide's July house price index came out on Friday morning, and it shows the market gently easing off the accelerator rather than braking. Annual house price growth slowed to 1.8% in July, down from 2.2% in June, with prices up just 0.1% on the month. The average UK home now costs £277,542.
The same report includes an interesting statistic: the average time people stay in a home is now 14 years. For those who own outright it stretches to 24 years, while private renters move roughly every 5. However you read it, Britain is moving house less often, which is part of why the number of homes coming up for sale stays tight even when price growth is modest.
What it means for you: for buyers, slow price growth is good news, your deposit isn't chasing a runaway target, and with prices this flat there's less pressure to rush. For sellers, realistic pricing matters more than it did a couple of years ago. And if you're weighing up what you can actually afford against what a lender will offer, our calculators are the place to start.
Critical illness cover: the payout that arrives while you're still here
This week's homeowner note tackles the protection product people most often muddle up with life insurance. The difference is simple and important: life insurance pays out when you die; critical illness cover pays out while you're still alive, if you're diagnosed with one of a list of specified serious illnesses. Think of it as money that turns up at exactly the moment your health, and possibly your income, has taken a serious knock.
In plain English, here's how it works:
- It pays a tax-free lump sum on diagnosis. Conditions covered vary by insurer, but policies typically include certain cancers, heart attack and stroke, along with a longer list of other serious conditions. You claim once, receive the money, and spend it however you need.
- The money is yours to use. Most people think of it as mortgage money, clearing the balance or covering payments during treatment and recovery, but it can just as easily fund home adaptations, private treatment, or simply replace a partner's income while they care for you.
- The small print matters. Two policies with the same headline price can cover different conditions, at different severities. This is the area of protection where definitions vary most between insurers, which is exactly why guidance helps.
- It's often paired with life cover. Many people take a combined life and critical illness policy alongside their mortgage, one premium, both bases covered. Our guide to life insurance vs critical illness cover walks through how the two fit together, and the protection overview covers the wider family.
- Sooner is cheaper. Premiums are based mainly on your age and health when you apply, so cover locked in while you're younger and well costs less, and pre-existing conditions can be excluded later.
Where DS Financial fits: working out whether you need critical illness cover at all, how much, and which insurer's definitions actually suit you is exactly what Debbie at DS Financial helps clients with, alongside their mortgage. If your cover hasn't been looked at since you took your mortgage out, or you've never had any, it's worth a no-pressure review, just drop her a line. (Critical illness cover is a regulated insurance product. This is general information, not a personal recommendation.)
That's your week: the base rate didn't move, but three of the nine people who set it wanted it higher, fixed rates are drifting up, house price growth is slowing, and it's a good moment to check what would happen to your mortgage if your health took a hit. If anything here raises a question about your own situation, just drop us a line, or have a no-pressure chat with Debbie at DS Financial.
General information, not financial, tax or legal advice. Figures correct at the time of writing (1 August 2026). Mortgage rates change frequently and the deals quoted may not be available when you read this.
Sources: Bank of England, Monetary Policy Summary and Minutes, July 2026 (Bank Rate held at 3.75%, 30 July 2026), Nationwide House Price Index, July 2026, "House price growth remained subdued in July" (31 July 2026), Moneyfacts, weekly UK residential mortgage rate data (average two- and five-year fixed rates, 14 to 28 July 2026), HomeOwners Alliance, best mortgage rates and lender repricing, week ending 30 July 2026, ONS, Consumer price inflation, UK (June 2026).