A second wave of mortgage rate hikes has pushed borrowing costs higher ahead of the Bank of England’s next interest rate decision this week.
The Bank is due to deliver its latest move on the Bank Rate this Thursday, with another hold expected.
But lenders are already taking action, off the back of higher swap rates.
NatWest, Santander, HSBC, Lloyds Bank and TSB are among lenders that have hiked rates for the second time since the start of September.
Since the start of March 2026, Moneyfacts says the average two-year fixed mortgage rate has risen by 89 basis points, 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 across 25 years.
The average two-year fixed mortgage rate is at its highest point since June, with the average five-year fixed back up to levels not seen since April.”
A 25 basis point 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 across 25 years, Moneyfacts says.
The average 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%.
New wave of mortgage rate hikes
Rachel Springall (pictured), Finance Expert at Moneyfactscompare.co.uk, says: “A second wave of mortgage rate hikes has begun from the major banks in reaction to growing concerns surrounding inflationary pressures.
“Swap rates have climbed above 4.70%, leading lenders such as NatWest, Santander, HSBC and TSB to increase selected fixed rates for the second time this month.
“It is highly likely other lenders will follow suit to adjust rates, and with some deals withdrawn from the market, it is expected any returning deals could well be priced higher. Several building societies have also started to price for a second time this week, such as Nationwide, and others have withdrawn and replaced products.
“The average two-year fixed mortgage rate is at its highest point since June, with the average five-year fixed back up to levels not seen 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 Bank Rate (BBR), yet mortgage rates could climb even higher if the Monetary Policy Committee (MPC) decide to increase the BBR.”
Springall suggests the mortgage pain shows no sign of easing for those borrowers who cannot yet lock into a new deal, particularly those with a five-year fixed who are not due to refinance until 2027.
She adds: “Back in February 2022, there were sub-2% fixed mortgages available, so moving off this rate will be a huge shock for borrowers.
“In the meantime, it is vital that lenders and brokers help customers understand the implications of ending their deal early, such as the early repayment charges. Despite the Government’s Mortgage Charter, not every single lender allows customers to lock in a new deal up to six months ahead of the end of a fixed rate deal.”
Industry comment
Meanwhile, Ian Harris, President of NAEA Propertymark, says: “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.
“Those coming to the end of historically low fixed-rate deals could face a significant increase in their monthly repayments when they remortgage. This underlines the importance of consumers engaging with a qualified mortgage adviser and exploring their options as early as possible, rather than waiting until their existing deal expires.
“For the housing market to operate effectively, confidence and affordability are crucial. Continued volatility in mortgage rates risks putting further pressure on buyers who are already stretching their finances and could lead some households to delay moving altogether.
“Government, lenders and the wider industry must continue to work together to support borrowers through this period of uncertainty. Ensuring consumers have access to clear information, appropriate advice and a competitive range of mortgage products will be vital to maintaining activity and confidence across the housing market.”
