Source: Kevin Peachey, cost of living correspondent, BBC News, “Borrowers expecting mortgage rates to drop have hopes dashed”, published 8 September 2026. Every rate in the worked examples below is from the Bank of England’s published quoted household interest rate series, and the Bank Rate and inflation figures from the Bank’s Bank Rate page and the ONS consumer price inflation bulletin for July 2026.
Our view
The households most affected are those whose fix was set in 2021, who have paid the same amount every month since, and who may not think about their mortgage until a letter arrives.
Our view: the reservation window matters more than this week’s rate movement. Many lenders let you reserve a new deal up to six months before your current one ends, and many let you switch to a cheaper one if rates fall before it starts. Your deal end date is the date to know.
What happened this week
Nearly all the major UK lenders announced increases to the cost of home loans in the first week of September. Rachel Springall of Moneyfacts told the BBC that “borrowers expecting mortgage rates to drop in the coming weeks have had their hopes dashed”, adding that it remains essential that borrowers do not delay seeking advice. Moneyfacts put the average rate on a new two-year deal at 5.65% and a five-year at 5.70% as of Tuesday 8 September.
The cause sits well outside the housing market. Since the conflict in the Middle East began at the end of February, global uncertainty has pushed up the cost of funding fixed-rate deals. Bank of England governor Andrew Bailey told the Treasury Committee that UK borrowers have seen the largest rise in mortgage rates of any G7 country apart from Japan since the conflict started. On top of that, UK government borrowing costs have been climbing: a 30-year bond sold on Tuesday carried a yield of 5.82%, the highest since 1998. Fixed mortgage rates are priced off those longer-term borrowing costs, not off Bank Rate directly, which is why deals can get more expensive while Bank Rate sits still at 3.75%.
Nobody in the story claims to know whether this is over. David Hollingworth of broker L&C said: “The difficult bit is knowing whether this is the end or just the first round of increases.” Aaron Strutt of Trinity Financial said he hoped it was the end of the rises “but there are certainly no guarantees”.
Coming off a 2021 five-year fix
The BBC says someone coming off a five-year deal faces paying more than £5,000 a year more on their next one. The Bank of England’s own data supports that figure.
Illustrative household, real published rates. The Bank of England’s series for a five-year fixed mortgage at 75% loan-to-value stood at 1.28% in September 2021. Take someone who borrowed £220,000 over 30 years at that rate.
- Their payment for the last five years: £736.26 a month.
- Balance now, with 25 years left to run: £188,937.73.
- Replacing it at the Bank’s August 2026 five-year rate of 4.78%: £1,080.43 a month — up £344.17 a month, £4,130 a year.
- Replacing it at the Moneyfacts market average of 5.70% quoted on 8 September: £1,182.92 a month — up £446.66 a month, £5,359.92 a year.
That is a 61% increase in the monthly payment. The two figures differ because the Bank’s series covers borrowers with 25% equity while the Moneyfacts average spans the whole market including higher loan-to-value deals. The deal available to you depends on your equity.
We also tested the BBC’s second figure — that a £250,000 two-year deal now costs about £120 a month more than at the start of March. On the Bank’s two-year series, which moved from 3.97% in February 2026 to 4.92% in August, the same £250,000 over 25 years goes from £1,315.45 to £1,449.85: £134.39 a month, £1,612.70 a year. That is slightly above the BBC’s number.
What a quarter-point rise costs
On the illustrative balance above — £188,938 over 25 years — every 0.25 percentage point is £27.39 a month, or £328.64 a year, locked in for the whole fixed period. Over a five-year fix, a quarter point is £1,643.
Bank of England data shows the proportion of mortgages where the loan is more than 90% of the home’s value has reached its highest level in 18 years. The Bank’s rate series shows the cost of a higher loan-to-value. In August 2026 a two-year fix at 90% loan-to-value averaged 5.16% against 4.92% at 75% — a 0.24 percentage point premium, worth £26.47 a month or £317.67 a year on our illustrative balance.
What to check this week
- Find your deal end date and write it in your calendar with a six-month alarm. It is on your annual mortgage statement or in your online account, and it takes about four minutes. If that date is inside six months, a lender or broker can tell you whether a new deal can be reserved now and whether you could switch if rates fall before it starts.
- Work out your loan-to-value before anyone quotes you. Take your outstanding balance and divide it by a realistic value for your home. Lenders price in bands, so whether you are at 78% or 81% changes which deals are available. Early repayment charge allowances are often 10% of the balance a year.
Check your credit file six months before you apply, so there is time to correct errors. Our guide to your credit report shows how to get all three free. If the new payment looks like it will not fit, work out your figures with our budgeting guide and the survival budget calculator before you speak to your lender.
How brokers are paid, and when going direct can make sense, is covered in when to use a mortgage broker.
What is still uncertain, and when we will know
Nobody quoted in this story knows whether the rises are finished. Two dates to watch:
- 16 September 2026 — the ONS publishes the next consumer price inflation bulletin. CPI rose 2.9% in the twelve months to July 2026, up from 2.6% in June, against a 2% target.
- 17 September 2026 — the Bank of England’s next Bank Rate decision. Bank Rate has been 3.75% since it was held on 30 July 2026. The Bank said then that it still expected inflation to rise later this year because of energy prices.
The inflation figure lands the day before the rate decision. For fixed mortgage rates, what matters is whether it shifts the market’s view of the next few years — which is already priced into the deals on offer today.
Where coaching ends and advice begins. Knowing your deal end date, your loan-to-value, what a rate step costs you and what your budget can carry — that is coaching, and it is all above. Choosing a specific mortgage product, lender, term or rate type is regulated advice, and we do not give it. Use a qualified mortgage broker or adviser for that. Buzz Money Coach is a trading style of Buzz Accounting Ltd, which is not authorised by the FCA to give regulated advice and does not give it. Where you need a regulated recommendation we say so and can introduce you to Equity & General, authorised and regulated by the FCA (No. 474163) — entirely optional, and if you become their client E&G pay Buzz a commission, which we tell you before the introduction. If the payment is the problem rather than the product, MoneyHelper, StepChange and National Debtline give free, independent help today, and your lender must treat you fairly if you tell them early.