Mortgage Rates Rise Again as Average Two-Year Fix Reaches 5.84%
UK mortgage rates have risen again in September, reversing some of the improvement borrowers had seen earlier in the year as lenders respond to higher funding costs and renewed concerns about inflation.
Moneyfacts data showed the average two-year fixed mortgage rate at 5.84% on 18 September, with the average five-year fix at 5.88%.
The increases come despite the Bank of England holding Bank Rate at 3.75% on 17 September.
That apparent contradiction highlights an important feature of the mortgage market: fixed mortgage rates do not simply move up and down when Bank Rate changes.
Lenders also price fixed deals according to wholesale funding costs, swap rates and expectations about where interest rates could go next.
Why have mortgage rates risen?
The immediate pressure has come from changing expectations about inflation and future interest rates.
UK CPI inflation increased to 3.1% in August, up from 2.9% in July, with higher energy and transport costs contributing to the rise.
At its September meeting, the Bank of England said inflation was likely to rise further over the coming quarters and judged the risks to the outlook to be tilted to the upside.
The Monetary Policy Committee voted by six votes to three to leave Bank Rate at 3.75%. Significantly, the three dissenting members wanted to increase it to 4%, rather than cut it.
That is a very different backdrop from periods when financial markets were expecting a steady sequence of rate reductions.
Higher market interest-rate expectations can push up swap rates, which are an important influence on the cost of funding fixed-rate mortgages.
As those funding costs rise, lenders may withdraw cheaper products or replace them with higher-rate deals.
Our guide to how rising interest rates affect your mortgage explains why fixed, tracker and variable mortgages can respond differently.
Mortgage rates had been lower earlier in 2026
The latest increases are particularly noticeable because mortgage pricing had improved earlier in the year.
By early September, some borrowers with larger deposits or substantial equity could still find individual fixed deals below 5%.
Those deals have not disappeared entirely.
As of 18 September, Moneyfacts showed the lowest widely available two-year fixed purchase rate at around 4.75%, with the lowest five-year fix around 4.74%, both at 60% loan-to-value.
But those best-buy rates should not be confused with market averages.
The average borrower may face a considerably higher rate depending on deposit, equity, fees, mortgage size and personal circumstances.
Moneyfacts' average rates by loan-to-value at the beginning of September ranged from around 5.1% at 60% LTV to above 6% at 95% LTV.
That makes deposit size and existing equity increasingly important.
Why Bank Rate staying at 3.75% has not stopped fixed rates rising
Borrowers can understandably wonder why mortgage rates are increasing when the Bank of England has not raised Bank Rate.
The answer is that fixed mortgages are based partly on expectations about the future, not simply today's Bank Rate.
The Bank of England itself said in its September meeting that increases in short-term market interest rates had been passing through quickly into lending rates.
It noted that quoted two-year fixed mortgage rates were around 0.95 percentage points higher than before the latest Middle East conflict began.
If financial markets become more concerned that inflation could remain high — or that Bank Rate may eventually need to rise — the cost of fixed-rate funding can increase before the Bank actually changes its official rate.
The reverse can also happen.
Mortgage rates can fall ahead of a Bank Rate cut if markets become confident that lower rates are coming.
That is why borrowers should avoid treating a Bank of England announcement as the only signal that determines mortgage pricing.
What does this mean for homeowners coming off a fixed rate?
The latest rise matters particularly to borrowers whose existing fixed mortgage is approaching its end.
Someone coming off a very low rate secured before or during the early stages of the 2022 rate increases may still face a substantial increase in monthly payments.
Even borrowers who fixed more recently could find that the rates available now are higher than those advertised several months ago.
For example, on a large mortgage, a difference of half a percentage point can materially change the monthly repayment.
That makes it worth reviewing options before the existing deal expires rather than automatically moving onto the lender's standard variable rate.
Our guide to what happens at the end of a fixed-rate mortgage explains the main options, including remortgaging and taking a new deal from the existing lender.
Should borrowers fix now or wait?
The September movements make that question harder rather than easier.
Waiting could prove beneficial if inflation pressures ease and market interest-rate expectations fall again.
But there is no guarantee that will happen.
The Bank of England has warned that inflation may rise further, while geopolitical developments and energy prices remain uncertain.
A borrower who delays in expectation of cheaper mortgages therefore takes the risk that rates instead rise further.
Someone taking a fixed deal now accepts a different trade-off: the security of knowing the rate and payment, but the possibility that cheaper deals become available later.
There is no universally correct choice.
The decision depends on factors including:
- How important payment certainty is
- How much equity the borrower has
- When the existing mortgage ends
- Whether early repayment charges apply
- How affordable a higher payment would be
- Whether the borrower expects to move
- The difference between available fixed and tracker rates
Our guide to tracker versus fixed-rate mortgages explains those differences in more detail.
What about first-time buyers?
Higher rates also affect buyers trying to enter the market.
A mortgage rate does more than determine the monthly payment.
It can also affect affordability calculations and potentially how much a lender is willing to advance.
First-time buyers with smaller deposits can face a double challenge because high loan-to-value mortgages often carry higher rates than deals available to borrowers with substantial deposits or equity.
At the beginning of September, Moneyfacts data showed average two-year fixed rates of around:
- 5.11% at 60% LTV
- 5.48% at 75% LTV
- 5.64% at 85% LTV
- 6.09% at 95% LTV
Those figures are market averages rather than guaranteed offers, and individual products change frequently.
They demonstrate why a headline saying mortgage rates are "below 5%" can be misleading.
Some individual deals remain below 5%, but many borrowers will not qualify for them.
Affordability still matters more than the headline rate
Borrowers should also be cautious about focusing on the interest rate alone.
A mortgage with a lower headline rate can come with a substantial arrangement fee.
Depending on the amount being borrowed and how long the product is held, a slightly higher rate with a smaller fee could sometimes cost less overall.
Other factors include:
- Loan-to-value
- Product fees
- Cashback
- Valuation costs
- Early repayment charges
- Mortgage term
- Portability
- Eligibility criteria
Lenders also carry out affordability checks based on the applicant's income, expenditure and existing commitments.
Our guide to how mortgage stress tests actually work explains why the monthly payment shown on a mortgage illustration is only part of the lender's decision.
Are mortgage rates heading back above 6%?
Average rates have moved closer to 6%, but their future direction cannot be predicted with certainty.
Much will depend on inflation, energy prices, financial markets and expectations for Bank Rate.
The important change in September is that the earlier assumption of steadily falling borrowing costs has been challenged.
Bank Rate has remained at 3.75%, but financial conditions have tightened and lenders have repriced mortgages upwards.
That means borrowers should be careful with old comparisons.
A mortgage article from earlier in 2026 describing steadily falling rates may no longer reflect the market someone faces today.
What borrowers should take from the latest rise
The September figures do not mean mortgage rates must continue rising.
Nor does the Bank of England's decision to hold Bank Rate mean mortgage pricing will remain unchanged.
The more useful conclusions are:
- Average fixed mortgage rates have risen again.
- Bank Rate remains at 3.75%.
- Fixed mortgage rates can move without a Bank Rate change.
- Inflation and market expectations are currently putting upward pressure on funding costs.
- Some sub-5% deals still exist, but they are not representative of the whole market.
- The rate available to an individual borrower depends heavily on LTV, eligibility and product terms.
Borrowers approaching the end of a deal may therefore want to understand what is available now rather than assuming rates will automatically fall before they need to refinance.
Exploring your options
If you want to understand what mortgage rates may currently be available based on your circumstances, you can request a mortgage quote to explore your options.
Requesting information does not commit you to taking a particular mortgage.
Sources
- Moneyfacts — UK fixed mortgage rates, updated 18 September 2026
- Bank of England — Monetary Policy Summary and Minutes, 17 September 2026
- Office for National Statistics — Consumer price inflation, August 2026
