Mortgage Rates Rise Sharply in September, Fixed Deals Below 5% Scarce
UKPulse Property Desk
Mortgage rates saw a significant increase in September, leading to a sharp reduction in the availability of fixed-rate mortgages below 5%. Tracker mortgages currently offer cheaper borrowing compared to fixed rates.
- Mortgage rates rose sharply in September, reducing the number of fixed-rate mortgages below 5% from over 1,500 to 131.
- The lowest two-year fixed-rate mortgage is around 5%, while the best two-year tracker deal is just above 4%.
- Experts predict the Bank of England base rate, currently 3.75%, could rise by 0.25 percentage points in November and again in early 2027.
Mortgage rates increased significantly in September, making fixed-rate deals below 5% much harder to find. At the start of September, over 1,500 fixed-rate mortgages offered rates below 5%, but this number had fallen to just 131 one month later.
In contrast, tracker mortgages have offered the cheapest borrowing since March. For remortgagers, the lowest two-year fixed rate is approximately 5%, while the best two-year tracker deal is just over 4%. The interest rate on a tracker mortgage is typically linked to the Bank of England base rate, which has remained at 3.75% throughout 2026.
However, there is a risk of increased repayments for those considering a tracker mortgage. Many experts forecast that the Bank of England will raise the base rate by 0.25 percentage points at its November Monetary Policy Committee meeting. Economists at Barclays Research anticipate a further 0.25 percentage point increase in early 2027, potentially taking the base rate to 4.25% by early next year.
If the base rate rises as predicted, monthly repayments on a tracker mortgage would increase. For example, a £250,000 mortgage with 25 years remaining would see monthly repayments increase by £141 if the interest rate rose from 4% to 5%.
Why this matters: The recent sharp rise in mortgage rates and the reduced availability of lower fixed-rate deals could impact borrowers looking to remortgage or secure a new loan. The potential for further Bank of England base rate increases means that tracker mortgage holders could see their monthly repayments rise.
What this means for you: If you are considering a tracker mortgage, your monthly repayments could increase if the Bank of England raises the base rate as predicted. It is important to ensure you can afford repayments if your interest rate were to rise by a full percentage point over the next year or so.