Mortgage costs in the UK are moving in two very different directions right now. While traditional mortgage rates are climbing again, many bridging lenders are heading the opposite way – cutting rates and making short-term finance more attractive for investors and developers.
Recent news shows a clear shift in the mortgage market. After a period of stability earlier in the year, rates started to increase sharply in March 2026.
The average two-year fixed mortgage has risen to around 5.28%, while five-year fixes are now at roughly 5.32%, both climbing noticeably in just a couple of weeks.
At the same time, the number of available deals has dropped significantly. Around 700 mortgage products have been withdrawn, showing how quickly lenders are reacting to market uncertainty.
This shift has been driven largely by global economic pressures. Rising oil and energy prices—linked to geopolitical tensions – are pushing inflation expectations higher. In response, lenders are increasing rates to protect their margins.
High street banks including HSBC, Barclays, NatWest and Nationwide have all repriced their mortgage ranges. Many have also withdrawn sub-4% deals entirely, meaning borrowers now have fewer low-cost options available.
In fact, average fixed mortgage rates have now moved above 5%, compared to below 4% just weeks ago.
For homeowners and buy-to-let investors, this means higher monthly repayments and reduced affordability. With around 1.8 million fixed-rate mortgages due to expire this year, many borrowers are about to face a significant jump in costs.
Why mortgage rates are increasing
The main reason behind rising mortgage rates is the outlook for interest rates and inflation.
The Bank of England has held its base rate at 3.75%, but there are growing expectations that rates could stay higher for longer—or even increase again if inflation worsens.
Lenders also price mortgages based on swap rates (their own cost of borrowing), which have risen quickly in recent weeks. This has forced banks to act fast, pulling products and increasing pricing across the board.
Put simply, mortgages are becoming more expensive because money itself is becoming more expensive.
Bridging lenders are cutting rates
While mainstream mortgage lenders are pushing rates up, the bridging sector is moving in the opposite direction.
Several bridging lenders have reduced pricing in recent weeks to stay competitive and attract business. For example, Inspired Lending has cut its rates to start from around 0.79% per month, down from 0.89%, London Credit has cut its residential bridging loan rates to 0.55% per month and SDKA have cut rates to 0.95% on semi-commercial deals.
This trend is being seen across the specialist lending market, with lenders offering more flexible terms and lower pricing—particularly for straightforward deals.
Bridging finance, which is designed as short-term funding (typically 6–24 months), is widely used by property investors for quick purchases, refurbishments, or auction deals – with some lenders like Maslow Capital offering up to 36 months. With speed and flexibility, it is less directly tied to long-term interest rate expectations than traditional mortgages.
More opportunities for developers
For developers, the picture is also improving on the short-term finance side.
Development finance lenders are specialists to fund ground-up construction or major refurbishments. It is often priced based on lender competition and risk appetite rather than just base rates. As more lenders enter the market, pricing has become more competitive.
Lower bridging rates can also help developers secure sites quickly before moving onto development finance, reducing overall project costs.
A growing gap between lending types
What we are seeing now is a widening gap between traditional mortgages and specialist finance.
On one hand, residential and buy-to-let mortgage rates are rising above 5%, products are being withdrawn, and affordability is tightening. On the other hand, bridging lenders are cutting rates and offering more flexible solutions.
This creates an interesting opportunity. Investors who rely on speed—such as buying below market value or at auction—may find bridging finance more attractive than ever. They can secure a property quickly, add value, and then refinance later when conditions improve.
What this means for borrowers
For everyday homeowners, rising mortgage rates are a challenge and may lead to higher monthly costs.
But for investors and developers, the current market presents a mixed picture. While long-term borrowing is becoming more expensive, short-term finance is becoming more accessible.
In simple terms:
- Mortgages are getting harder and more expensive
- Bridging and development finance are becoming more competitive
As the market continues to shift, those who understand both sides of the lending landscape will be in the strongest position to take advantage of new opportunities.
