Why Are Mortgage Rates Rising? What’s Behind It and What to Do
Bank Rate hasn’t gone up, yet mortgage rates are heading that way. Moneyfacts put the average two-year fixed rate at 5.98% and the five-year at 6.00% on 5 October, the highest in about three years for the five-year.
The reason is how fixed mortgages are priced. Here’s what’s driving it, what it costs, and how to protect yourself if your deal ends soon. The figures are correct as of mid-October 2026.
Bank Rate Hasn’t Moved, but Fixed Rates Have
Bank Rate stands at 3.75%. The Bank held it on 17 September, with six members voting to hold and three voting for a rise to 4%. So the base rate is not what’s pushing mortgage prices up.
Fixed rates follow something else, and it has jumped. The Bank says two-year fixed mortgage rates are about 0.95 percentage points higher than before the Middle East conflict began.
What a Swap Rate Is
When a lender offers you a five-year fix, it has to fund that money for five years at a known cost. It does so using swap rates, which reflect where the market expects interest rates to go. Lenders then add their margin.
If traders expect rates to rise, swap rates go up, and fixed mortgages follow within days. That can happen long before the Bank does anything. It’s also why fixed rates sometimes fall while Bank Rate is unchanged.
What Pushed Swap Rates Higher
The Middle East conflict has disrupted oil and gas supplies. Fuel and wholesale gas prices have climbed, and inflation has moved with them. CPI reached 3.1% in August, and the Bank expects it to approach 3.75% by the end of the year.
Higher inflation makes rate cuts less likely and rate rises more likely. Before the conflict, markets expected two cuts during 2026. Some now expect rises instead. Gilt yields, the cost of government borrowing, have climbed alongside, and that feeds into lenders’ funding costs too.
How Lenders Have Reacted
Lenders have repriced quickly. According to Moneyfacts, Barclays raised selected fixed rates four times in September, while HSBC, Lloyds, Nationwide, Santander and TSB each did so three times.
The cheapest deals have gone. Fixed mortgages priced below 5% fell from nearly 1,500 at the start of September to nine, once you leave out products available only in Northern Ireland.
What It Costs in Pounds
Take a £200,000 repayment mortgage over 25 years. At 4.5% the payment is about £1,110 a month. At 6% it’s about £1,290. That’s roughly £180 a month more, or over £2,100 a year, on the same loan.
A higher payment also trims what a lender will let you borrow, since affordability checks are built on it. Our first-time buyer mortgage calculator shows the effect on your own figures.
Dates to Watch
The Autumn Budget is on 28 October, and the Bank’s next rate decision follows on 5 November. Economists are divided. Several expect a rise in November, with another in February taking Bank Rate to 4.25%. Others think it could hold through the year.
Swap rates move on expectations rather than outcomes, so a surprise either way can shift mortgage prices quickly. Nobody can say in advance which way.
What You Can Do About It
If your deal ends within six months, start now. Many lenders let you secure a new rate well ahead of the end date, and some allow you to switch if a cheaper deal appears before completion. Our page on what happens when your fixed mortgage rate ends covers the options, including a product transfer with your current lender. Whether that beats moving elsewhere is explained in our comparison of remortgage vs product transfer.
If you’re buying, secure a mortgage in principle and ask for a rate hold, then test your budget with the rate a point higher. A larger deposit can also drop you into a cheaper loan-to-value band, which sometimes saves more than waiting.
Fixed or tracker is a separate question. We cover it in our guide to fixed vs tracker mortgages. A fix suits people who need steady payments, while a tracker suits those who can cope with movement.
Don’t leave it until the last month. Lenders can withdraw products with little notice in this market.
Could Rates Come Back Down?
They could. If the conflict eases and energy prices fall, inflation worries fade and swap rates usually drop with them. Fixed mortgage pricing can fall faster than it rose. Our look at whether mortgage rates will fall below 3% in 2026 covers what would need to change.
That’s a reason to keep your options open, rather than a reason to wait. A broker can help you secure a rate and then check whether a better one appears.
Frequently Asked Questions
Why are mortgage rates going up when the base rate hasn't?
Fixed mortgage rates follow swap rates, not Bank Rate.
Swap rates have risen because markets expect higher interest rates after inflation picked up.
What is a swap rate?
It’s the rate lenders pay to fund a fixed-rate mortgage over a set number of years.
It moves with market expectations of future interest rates, and lenders add their margin on top.
Will mortgage rates keep rising?
Nobody knows.
Rates could rise further if inflation stays high and the Bank raises Bank Rate, or fall back if energy prices ease.
Should I fix my mortgage now?
If you want your payments to stay the same and your deal is ending soon, fixing can make sense.
A broker can show you what is available and whether you can switch if rates drop.
How far ahead can I arrange a new mortgage?
Many lenders let you secure a rate up to six months before your deal ends, and some allow longer.
Check your own deal for early repayment charges first.
Does a bigger deposit help?
Yes.
Lenders price in bands of loan-to-value, so a larger deposit can move you into a cheaper band.
Speak to a mortgage specialist
Rates are changing week by week. Speak to us before your deal ends and we’ll check what’s available.
UK Mortgage Broker is a whole-of-market broker helping clients throughout the UK and globally to secure funding on UK property. We are directly authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Call: +44 1628 969 500 Email: info@uk-mortgagebroker.co.uk
Related Pages
- What Happens When Your Fixed Mortgage Rate Ends – your options when the deal comes to an end.
- Remortgage vs Product Transfer – which route is cheaper and quicker.
- Fixed vs Tracker Mortgages – how to choose between them.
- Will Mortgage Rates Fall Below 3% in 2026? – what would have to change.
- First Time Buyer Mortgage Calculator – see what a higher rate does to your payment.