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This information is correct as at the date of publication: 21/10/2026. Please contact us for up-to-date details.
Rates have fluctuated this year; markets now expect the Bank of England’s next move to be upwards, and the government has proposed a new scheme that could help first-time buyers enter a new build with a 2.5% deposit. Here is where the mortgage market stands, and what homeowners and homebuyers can actually do about it.
The Bank of England held the Base Rate at 3.75% on 17 September 2026, a sixth consecutive hold, on a 6 to 3 vote. The next decision is 5 November 2026. (Bank of England)
Average fixed rates are close to 6%. The five-year average reached 6.00% on 5 October 2026, the first time in about three years, and stood at 5.99% on 19 October. The two-year average was 5.96%. (Moneyfacts data, 19 October 2026)
The Base Rate does not set fixed rates. Fixed deals are priced on what markets expect interest rates to do over the next few years, which is why they rose through September while the Base Rate did not move at all.
The average is not your rate. Borrowers with more equity are routinely offered rates below the market average. Deals priced below 5% became scarce through September, then began returning in mid-October. (Moneyfacts best buys, 1 October 2026)
The government has proposed Your First Home, an equity loan scheme for first-time buyers buying a new build in England: a 2.5% deposit plus a 20% government-backed equity loan. It is not open yet, and the full detail of the scheme is expected to be announced at the Budget on 28 October 2026. (gov.uk)
If a fixed deal ends and nothing is arranged, you move onto your lender’s Standard Variable Rate, averaging 7.13%. That is roughly 1.2 percentage points above the average five-year fix.
Stamp Duty will not change at this Budget. The Prime Minister ruled it out in July. If that was your reason for holding off a move, it no longer applies. (Reuters, 27 July 2026)
You may be able to reserve a rate up to six months ahead and move to a lower available rate if pricing improves before completion.¹
The FCA found in September that 58% of adults hold no protection product at all, and that 59% of them have never considered whether they need it. (FCA MS24/1.5)
You do not need any of this to talk to us, but it makes the rest of the article easier to follow.
Loan to value. The size of your mortgage compared with what the property is worth, written as a percentage. For illustration purposes, if you are buying a £200,000 home with a £40,000 deposit, you are borrowing £160,000, which is 80% loan-to-value. The lower the number, the better the rates you are usually offered.
Equity. Your home equity is the share of your home you own outright. It grows as you pay the mortgage down and as the property rises in value. More equity means a lower loan-to-value, which means better rates.
Fixed rate. Your interest rate is locked for a set period, usually two or five years, so your payments do not change during it.
Variable rate. Your interest rate can go up or down, normally following the Bank of England Base Rate.
Standard Variable Rate, or SVR. Your lender’s default variable rate. It is what you move onto automatically when a fixed deal ends and nothing new is arranged, and it is usually one of the most expensive rates a lender offers.
Equity loan. A loan secured against a share of your property rather than a cash sum you repay monthly. You settle it later, normally when you sell or remortgage. See section 6.
It is the question everyone with a mortgage is asking, and the honest answer is that nobody knows for certain. What we can tell you is where rates are today, what markets currently expect, and, more usefully, what you can actually do about it.
Because here is the part that gets lost in the headlines: you have far more control over your mortgage than you have over the Base Rate. Your timing, your product, your loan-to-value and your total cost are all things you can influence right now. That is where the opportunity is.
Fixed mortgage rates have fluctuated through the year rather than moving steadily in one direction. They fell over the summer, climbed again through September, and now sit higher than they did in the spring, which has cooled parts of the housing market. Markets currently expect the Bank of England’s next move to be upwards rather than downwards, although several major lenders began cutting their own rates in mid-October. The market has moved in both directions this year and is moving again now, which is why the case for looking early rests on keeping your options open rather than on predicting what happens next.
According to Moneyfacts, the average two-year fixed rate was 5.96% and the average five-year fixed rate was 5.99% on 19 October 2026. The five-year average reached 6.00% on 5 October, its highest since late September 2023 and the first time it had been at that level in about three years. The two-year average peaked at 5.98% on the same day, its highest since mid-December 2023.
The market below 5% thinned sharply over the same period. Moneyfacts counted 1,494 fixed deals priced under 5% at the start of September. By 5 October there were nine.
The average Standard Variable Rate, the rate you move onto automatically when a deal ends, was 7.13% in September 2026 (Moneyfacts).
A variable rate can look cheaper than a fix on the day you compare them, but it moves with the Base Rate. If the Base Rate rises, your monthly payments rise with it. A fixed rate usually costs more in exchange for knowing exactly what you will pay. Which suits you better depends on your circumstances and how much certainty you want, and it is worth talking through rather than deciding on one number.
Two things are worth drawing out.
Five-year fixes are priced marginally above two-year fixes, reversing the pattern that held for most of the period since late 2022. Longer fixes price in where rates are expected to go, and that expectation has changed.
These are market averages across every loan-to-value band. Borrowers with more equity are routinely offered rates well below them, and borrowers with a small deposit are usually offered rates above them. The gap between the average and the lowest rates available is the single biggest reason not to assume the headline figure applies to you.
If you have built up equity since you last remortgaged, you may now sit in a better band than you did, and that can be worth more than waiting for the market to shift.
The Monetary Policy Committee held the Base Rate at 3.75% on 17 September 2026, voting 6 to 3. The three dissenting members, Megan Greene, Catherine Mann and Huw Pill, voted for a rise to 4.00%. It was the sixth consecutive hold, and the Base Rate has been unchanged since December 2025.
The Committee was clear about its reasoning. Inflation rose to 3.5% in the year to September, up from 3.1% in August and above the 3.4% most economists had expected. It is the highest rate since October 2025, and the rise came directly from energy, principally petrol and diesel. Core inflation, which strips out energy, food, alcohol and tobacco, rose to 2.8% from 2.6%. The Bank expects inflation to reach around 3.75% in the final quarter of 2026 and slightly above 4% in early 2027 before easing back, which is what keeps higher interest rates on the table. It also warned that if the conflict in the Middle East continues, and higher energy costs start pushing up wages and the price of other things, it may have to raise rates.
Markets have taken that seriously. Through late September, the financial markets that lenders use to price fixed deals moved sharply towards expecting a rise at the November meeting, with several increases priced in by the middle of next year.
Economists have moved the same way. Through September most named forecasters still expected a hold, but after the September inflation figure several now expect a rise at the November meeting. Markets and economists have largely converged, where a month ago the gap between them was unusually wide.
Markets have been wrong repeatedly this year. In January the consensus expected several cuts across 2026 and none arrived. Market pricing tells you what investors currently believe, not what will happen.
The next decision is on 5 November 2026, with a further one on 17 December 2026.
This trips up a lot of people, and understanding it makes the market much less mysterious.
Tracker and variable deals follow the Base Rate. Fixed deals do not.
Fixed rates are priced off something called swap rates. In plain terms, these reflect what financial markets expect interest rates to average over the next two or five years, rather than what the Base Rate happens to be today. Lenders use them to work out what it costs to guarantee you a fixed rate for that long.
That is why fixed pricing rose steadily through September while the Base Rate did not move at all. Lenders repriced to their own higher funding costs, several of them more than once.
The useful implication is that this works in both directions. Fixed pricing fell in August with no Base Rate movement whatsoever. It does not take a Bank of England decision for deals to improve, which is one of the reasons a reservation with a review before completion is worth having.
It is easy to read the headlines and assume the market is heading in one direction. It is not.
Lenders set their own prices based on their funding costs, how much new lending they want to take on, and how busy their pipeline already is. One lender can reprice upward in the same week another holds or reduces, and they rarely move in step.
In mid-October several major lenders moved against the trend. NatWest reduced residential and buy-to-let rates by up to 0.43% with effect from 15 October, and HSBC announced reductions on the same day. Both did so while their own funding costs were rising. Two-year swap rates moved from 4.545% to 4.641% over the preceding month, and five-year swaps from 4.619% to 4.723%.
That is the clearest illustration of the point. Lenders price to compete as well as to cover their costs, and a lender can cut in a week when the cost of its own funding has gone up.
That is the argument for comparing across a range of lenders rather than going straight to one. The right rate for your circumstances this week may come from a lender you have never considered, and a lender who was uncompetitive last time you looked may not be today.
Averages tell you about the market. They do not tell you about your mortgage.
On 26 September 2026 the government announced a new equity loan scheme for first-time buyers in England, called Your First Home.
What has been announced. A 2.5% deposit from the buyer, alongside a 20% government-backed equity loan with an interest-free period at the start, and a mortgage covering the remaining 77.5%. The property must be a new build, bought from a developer signed up to the scheme. Developers will contribute to the cost of running it.
For illustration purposes, on a £200,000 new build the split would look like this:
£5,000 deposit from you (2.5%)
£40,000 government-backed equity loan (20%)
£155,000 from your mortgage (77.5%)
What has not been announced. Almost everything else. There is no application process, no launch date and no published eligibility criteria. The government has said full details will come at the Budget on 28 October 2026, and has indicated there will be limits on household income and on property prices in different parts of the country.
This is the part worth understanding properly, because the name is misleading and it caught a lot of people out under the previous Help to Buy scheme, which is now not available.
An equity loan is not a grant and it is not free money. The government lends you a share of the purchase price, and you repay it later, normally when you sell the property or remortgage away from the scheme.
Here is the part most people find surprising. The amount you repay is usually worked out as a percentage of what the property is worth at the time you repay it, not the sum you originally borrowed. For illustration purposes, if the government lends you 20% of a £250,000 home, that is £50,000 today. If the home is worth £300,000 when you come to repay, you owe 20% of £300,000, which is £60,000. If your home rises in value, the amount you owe rises with it.
The interest-free period means exactly what it says: a set time at the start during which no interest is charged on the equity loan. It does not last for the life of the loan. Under Help to Buy, interest became payable after five years. Whether Your First Home works the same way has not been confirmed.
None of this makes an equity loan a bad idea. For plenty of buyers Help to Buy was the difference between owning and renting. It does mean the total cost is not the same as the headline interest rate, which is worth understanding before you commit rather than afterwards.
Nothing, is the honest answer, because there is nothing to apply for yet.
What is worth doing is understanding how it would sit alongside what already exists. Own New Rate Reducer and Deposit Drop are two builder-backed schemes available today for new build buyers, and the right choice between a builder incentive scheme and a government equity loan will depend on your deposit, the development and the lender. If you are saving towards a first home on a new development, that is a conversation worth having before the Budget rather than after it, so you are ready either way.
We will publish an update within a couple of days of 28 October 2026 setting out what actually changed.
The Budget is on Wednesday 28 October 2026. There is a great deal of speculation about what it will contain, and it is worth separating what has actually been confirmed from what is still rumour.
Stamp Duty will not change at this Budget. This is the clearest answer available on any of it, and it comes from the Prime Minister. Asked in July whether stamp duty would be changed or scrapped, Andy Burnham said: “Yes, I can say that quite clearly. That won’t be happening.” Reporting at the time noted that uncertainty over stamp duty had been stalling deals. If that was your reason for holding off a move, it no longer applies.
Your First Home will be confirmed. The scheme described in section 6 is the one housing measure we know is coming. What we do not yet have is the detail that decides whether it is any use to you: the income limits, the regional price caps, how long the interest-free period lasts and when it opens.
Council tax on higher-value homes is already changing. The High Value Council Tax Surcharge was announced at the Autumn Budget 2025 and takes effect from April 2028, on properties in England valued at £2 million or more. It falls on owners rather than occupiers, and the government consulted on the detail, including possible exemptions, earlier this year.
Capital Gains Tax has been discussed, including the idea of moving rates closer to Income Tax. Nothing has been announced. You do not usually pay Capital Gains Tax when selling your main home, so any change here would mainly affect people selling an additional property.
Beyond those, treat what you read with caution. Most Budget coverage before the day is speculation, and it moves sentiment without anything having actually changed. We will publish an update within a couple of days of 28 October 2026 setting out what was announced and what it means for you.
This is where the biggest and most reliable savings sit for homeowners, and it has nothing to do with predicting the market.
In its Financial Stability Report the Bank of England estimated that nearly 750,000 households paying less than 3% would reach the end of their fixed deals during 2026, and that this group would see monthly payments rise by around £170 on average. If that is you, the step up is real, and it is better understood now than discovered when the first new payment leaves your account.
There is a second cost, and you can avoid it entirely. When a fixed deal expires and you do not arrange anything, you move onto your lender’s Standard Variable Rate. At an average of 7.13%, that is well over a percentage point above the average five-year fixed rate of 5.99%, which on a typical mortgage is a meaningful monthly difference on top of the step-up you were already facing.
That is not a forecast. It is a cost you can avoid with a phone call in good time. Whatever rates do next, nobody should be paying an SVR by accident.
You may be able to secure a rate up to six months before your current deal ends, and move to a lower available rate if the market improves before completion, subject to lender criteria and product availability.¹ Leaving it until your deal ends could limit the options available to you.
In practice that means you have some protection if rates rise, while keeping the option to move if they fall.
If your deal ends before March 2027, you can act today.
A mortgage review is also a sensible moment to look at the protection you have in place and whether it still offers the best value.
The Financial Conduct Authority published the final report of its Pure Protection Market Study on 21 September 2026. It found that 58% of adults hold no pure protection product at all, meaning no life cover, no critical illness cover and no income protection, and that 59% of that group have never considered whether they need it.
That second figure is the more striking one. The gap is not mainly about price or about people weighing it up and deciding against. For most of them the question has simply never come up.
The connection to your mortgage is straightforward. If your household lost an income tomorrow, you would still need to pay the mortgage. Protection decides whether that becomes a difficult few months or a forced sale.
A new job, a move, a marriage, a new child or a change in income all alter what makes sense. If any of those applied to you this year, your cover may no longer match your circumstances.
You do not need to know which product you want before speaking to someone. The starting point is simply understanding what would happen financially if an income stopped.
Our protection experts will review any existing policies and make no obligation recommendations.²
The lowest rate is not always the cheapest mortgage, and good advice earns its keep here.
Mortgages often come with an arrangement fee, sometimes over £1,000, and on a smaller loan that fee can wipe out everything you save from a lower interest rate. A no-fee deal at a slightly higher rate can work out cheaper overall than an eye-catching rate with a large fee.
What matters is the total cost over the initial period. That means the interest, plus the arrangement fee, plus valuation costs, minus any cashback, and considering early repayment charges, which are the penalties for leaving a deal before it ends.
We compare products on that basis rather than on the headline number, because the total cost, not the advertised rate, is what decides your monthly payments and what actually leaves your account.
The Budget on 28 October 2026, covered in section 7.
The Base Rate decision on 5 November 2026, which comes with the Bank’s updated forecasts, followed by the final decision of the year on 17 December 2026.
Energy prices. These are the direct cause of the current inflation overshoot. A sustained fall would change the outlook faster than anything else on this list.
Inflation data. The Bank is watching whether higher energy costs start feeding into wages and the price of other things. That is the risk it has warned about, and it is the thing most likely to decide November.
The mortgage market is moving weekly, and deals are not staying on the shelf. Lenders repriced repeatedly through September, several of them more than once. Keeping track of that is our job, not yours.
Newhomes Mortgage Services provides fee-free mortgage advice² and can:
Compare mortgage products from more than 75 lenders
Access broker-only deals that are not available if you go direct
Secure a rate up to six months before your current deal ends¹
Review your rate again before completion if pricing improves¹
Compare options on total cost rather than headline rate
Check whether your loan-to-value band has improved since you last borrowed
Talk through new build schemes, including Own New Rate Reducer and Deposit Drop
Review your protection alongside your mortgage
Whether you are a first-time buyer, moving house, remortgaging, or a landlord, our advisers will tell you where you stand and what your options are.
If your current deal ends before March 2027, now is the time to talk to us. Get in touch for a no-obligation review.
Call 01543 464 144. We are open seven days a week.
Note 1. Securing a rate in advance and moving to a lower available rate before completion are both subject to lender criteria and product availability. Switching products or lenders may incur additional costs. Eligibility and availability depend on individual circumstances.
Note 2. Our mortgage advice is fee-free. Other costs, such as arrangement, valuation or legal fees, may apply where relevant, and we will explain all costs before you proceed. Protection and insurance services are not fee-free; any fee is explained before you commit.
Note 3. Mortgage rate figures quoted are averages across all deposit sizes on the dates shown, together with the lowest rate available to a stated borrower type and loan-to-value band on the date shown. They describe the market and are not the rate available to any individual borrower.
Note 4. Your First Home has been announced by government but is not open. No application process or launch date has been published. Details are expected at the Budget on 28 October 2026 and may change.
Note 5. Market pricing reflects what investors currently expect and is not a forecast of what will happen.
Your home may be repossessed if you do not keep up repayments on your mortgage.
This guide is general information, not financial advice, and lender criteria change. Always speak to a qualified adviser about your own circumstances.
New Homes Mortgage Services LLP is an appointed representative of Sesame Ltd which is authorised and regulated by the Financial Conduct Authority
New Homes Mortgage Services LLP is a Limited Liability Partnership.
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Registered address at 1 and 2 Morston Court, Blakeney Way, Cannock, WS11 8JB.
Bank of England. Monetary Policy Summary and minutes of the Monetary Policy Committee meeting ending 16 September 2026. Published 17 September 2026. Base Rate held at 3.75%, 6 to 3 vote, dissenting members, inflation projection and guidance on wage and price effects. https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
Office for National Statistics. Consumer price inflation, UK: September 2026. Published 21 October 2026. CPI at 3.5% in the year to September, up from 3.1% in August, core CPI at 2.8%, and the energy contribution to the overshoot. https://www.ons.gov.uk/economy/inflationandpriceindices
Ministry of Housing, Communities and Local Government. New first-time buyer scheme to be confirmed at Budget. Published 26 September 2026. Your First Home: 2.5% deposit, 20% government-backed equity loan, interest-free period, new build in England, developer participation, detail to follow at the Budget. https://www.gov.uk/government/news/new-first-time-buyer-scheme-to-be-confirmed-at-budget
HM Treasury. Autumn Budget 2026 date, letter to the Treasury Select Committee. Published 31 July 2026. Budget confirmed for Wednesday 28 October 2026. https://www.gov.uk/government/organisations/hm-treasury
Financial Conduct Authority. MS24/1.5, Market study into the distribution of pure protection products to retail customers: Final Report. Published 21 September 2026. 58% of adults hold no pure protection product, and 59% of that group have never considered their protection needs. https://www.fca.org.uk/publications/market-studies/ms24-1-market-distribution-pure-protection
Moneyfacts. Average mortgage rate data. Two-year fixed average 5.96% and five-year fixed average 5.99% on 19 October 2026; the 6.00% five-year peak and 5.98% two-year peak on 5 October 2026; the fall in sub-5% deals from 1,494 at the start of September to nine on 5 October; and the Standard Variable Rate average of 7.13% in September 2026.
Reuters. UK PM Burnham rules out changes to stamp duty at next budget. Published 27 July 2026. Direct quotation and confirmation that stamp duty is not changing at this Budget. https://live.euronext.com/en/financial-news/uk-pm-burnham-rules-out-changes-stamp-duty-next-budget
Bank of England. Financial Stability Report, July 2026, published 7 July 2026. Nearly 750,000 households paying below 3% reaching the end of fixed deals during 2026, with an average increase of around £170 a month. The same report put the typical increase for all owner-occupiers coming off a fix in the next two years at around £45, so the £170 figure applies to the sub-3% group specifically. https://www.bankofengland.co.uk/financial-stability-report/2026/july-2026
Financial Reporter. NatWest cuts residential and buy-to-let rates by up to 0.43%, 14 October 2026, effective 15 October 2026.
Mortgage Strategy. HSBC lowers rates across resi and BTL, 14 October 2026. Includes the swap rate movements quoted in section 5: two-year swaps from 4.545% to 4.641% and five-year swaps from 4.619% to 4.723% over the month to 13 October 2026.
House of Commons Library. High Value Council Tax Surcharge and homes over £2 million, CBP-10934. Published 2 July 2026. Announced at the Autumn Budget 2025, effective April 2028, on properties in England valued at £2 million or more, charged at a flat rate by band from £2,500 to £7,500, applicable to owners rather than occupiers. The government estimates around £430 million a year from 2028/29, and the Treasury expects fewer than 1% of properties in England to be above the threshold. https://commonslibrary.parliament.uk/research-briefings/cbp-10934/
At New Homes Mortgage Services LLP, we strive to provide accurate and up-to-date information at the time of publication. However, due to the dynamic nature of the property market, details may change and this content is intended for general informational purposes only. It does not constitute financial or professional advice and should not be relied upon as such.
We cannot accept responsibility for any decisions made based on this information. For advice tailored to your individual circumstances, please consult our qualified mortgage advisors. We recommend that you independently verify any important details before making financial commitments.
