The UK lending market is currently splitting in two. Traditional mortgage rates are on the rise again, yet bridging lenders are moving the other way—cutting their pricing and making short-term borrowing increasingly appealing for investors and developers.
Recent developments highlight a clear change in direction. After a relatively steady start to the year, mortgage rates began to rise quickly in March 2026.
Average two-year fixed deals have increased to roughly 5.28%, while five-year fixed rates are sitting at about 5.32%. Both have jumped noticeably within a short space of time.
At the same time, the number of mortgage products available has fallen sharply. Around 700 deals have been withdrawn, showing how quickly lenders are responding to uncertainty in the market.
This shift is largely being driven by global economic pressures. Increasing oil and energy prices—linked to geopolitical tensions—are pushing inflation expectations higher. In response, lenders are raising rates to protect their margins.
Major lenders such as HSBC, Barclays, NatWest and Nationwide have all repriced their offerings. Many have also removed sub-4% deals entirely, leaving borrowers with far fewer low-cost options.
As a result, average fixed mortgage rates have now moved above 5%, compared to below 4% only a few weeks ago.
For homeowners and buy-to-let landlords, this means higher monthly payments and reduced affordability. With around 1.8 million fixed-rate mortgages set to expire this year, many borrowers are likely to face a sharp increase in costs.
Why Are Mortgage Rates Going Up?
The main driver behind rising mortgage costs is the outlook for inflation and interest rates. Tensions and uncertainty surrounding the war in the Middle East is pushing up inflation and energy prices which have a knock on effect resulting in higher mortgage rates.
Although the Bank of England has held the base rate at 3.75%, expectations are growing that rates could remain elevated for longer—or even rise further if inflation worsens.
Lenders also base their pricing on swap rates, which reflect their own cost of borrowing. These have increased rapidly in recent weeks, forcing lenders to act quickly by withdrawing products and raising rates across the board.
In simple terms, as the cost of money increases, so does the cost of borrowing.
Bridging Lenders Move in the Opposite Direction
While mainstream mortgage providers are increasing rates, bridging lenders are becoming more competitive.
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 visible across the specialist lending market, where lenders are offering more flexible terms and sharper pricing—particularly for straightforward transactions.
Bridging finance is designed as a short-term solution, typically lasting between 3 and 24 months (with some lenders like Maslow Capital offering up to 36 months). It is commonly used by property investors for quick purchases, refurbishments or auction deals. Because of its short-term nature and speed, it is less directly influenced by long-term interest rate expectations than traditional mortgages.
Improved Conditions for Developers
The outlook for developers is also becoming more favourable in the short-term finance space.
Development finance—used for ground-up construction or major refurbishments—is often priced based on competition between lenders and their appetite for risk, rather than solely on base rates. As more lenders enter the market, pricing has become increasingly competitive.
Lower bridging rates can also help developers secure sites quickly before transitioning onto development finance, reducing overall project costs.
A Growing Divide in the Lending Market
There is now a clear and widening gap between traditional mortgages and specialist finance.
On one side, residential and buy-to-let mortgage rates are rising above 5%, product choice is shrinking, and affordability is tightening. On the other, bridging lenders are lowering rates and offering greater flexibility.
This divergence creates new opportunities. Investors who need speed—such as those buying below market value or at auction—may find bridging finance more attractive than ever. They can acquire properties quickly, add value, and refinance later when market conditions improve.