Second wave of mortgage hikes ahead of MPC meeting
Borrowing costs have risen again thanks to a second wave of mortgage hikes this month, ahead of tomorrow’s interest rate announcement, analysis from Moneyfactscompare.co.uk shows.
It says more shocks are set to come with up to four interest rate hikes possible next year.
Moneyfacts said the second wave of September mortgage rate hikes from the likes of NatWest, Santander, HSBC, Lloyds Bank and TSB, are on the back of higher swap rates which have climbed above 4.70%.
Since the start of March 2026, the average two-year fixed mortgage rate has risen by 0.89%, adding £131 to monthly mortgage repayments, or £1,572 per year, based on a rate of 4.84%, rising to 5.73% – borrowing £250,000 over 25 years.
It said that a 0.25% rise on a typical two-year fixed-rate mortgage would add around £38 to monthly mortgage repayments, or £456 per year, based on a rate of 5.73%, rising to 5.98% – borrowing £250,000 over 25 years.
The Moneyfacts Average New Mortgage Rate stands at 5.68%, up from 5.59% at the start of August and remains higher than at the start of March at 4.90%.
Other lenders likely to follow suit
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “A second wave of mortgage rate hikes has begun from the major banks in reaction to growing concerns surrounding inflationary pressures.
“It is highly likely other lenders will follow suit to adjust rates, and with some deals withdrawn from the market, it is expected any returning deals could well be priced higher. Several building societies have also started to price for a second time this week, such as Nationwide, and others have withdrawn and replaced products.
She said the average two-year fixed mortgage rate is at its highest point since June, while the average five-year fixed is at its highest since April.
“This will be hugely disappointing news for borrowers. It demonstrates how fixed mortgage rates are not intrinsically linked to adjustments to the Bank of England Base Rate (BBR), yet mortgage rates could climb even higher if the Monetary Policy Committee (MPC) decide to increase the BBR,” she said.
She pointed out that economists expect a hold this week, and a rise of 0.25% in November but that speculation suggests that four out of the five policy decisions between February and July 2027 will see BBR hikes.
“The total cumulative increase of five rises would add 1.25% to BBR by the end of July 2027, with BBR rising from 3.75% to 5.00%,” she said.
Ian Harris, president of NAEA Propertymark (National Association of Estate Agents), said: “Rising mortgage rates will be a concern for many homeowners and prospective buyers already navigating challenging affordability conditions. With fixed-rate deals continuing to increase ahead of the next Bank of England decision, consumers are facing greater uncertainty over the cost of borrowing and what this means for their household finances.”
