The mortgage market has continued to change quickly over the last month.
September’s run of mortgage rate increases continued into early October, pushing average fixed rates back towards levels not seen for around three years.
Since then, the picture has become a little more encouraging.
A number of major lenders have started reducing rates again as competition has returned to the market, although average mortgage rates remain considerably higher than they were before September’s increases.
The latest inflation figures have also provided another reminder that the outlook remains uncertain, with UK inflation rising from 3.1% to 3.5%.
Here’s what has happened over the last month.
September – Mortgage Rates Continue to Rise
Last month’s update covered the change in direction that took place during September, as increasing funding costs led many lenders to raise their fixed mortgage rates.
Those increases continued after the Bank of England’s September meeting.
By late September, average fixed mortgage rates were moving closer to 6%, with a succession of major lenders continuing to reprice.
Barclays, Nationwide, TSB and Virgin Money were among those announcing further increases, with some lenders changing their rates several times within a relatively short period.
The speed of those changes was significant.
By the beginning of October, Barclays had increased some fixed rates for the second time in a week, with some products increasing by as much as 0.40%.
It demonstrated again how quickly mortgage pricing can move when lenders’ funding costs and financial market expectations change.
Average Fixed Rates Reach Around 6%
The cumulative effect of September’s increases became particularly clear at the beginning of October.
The number of fixed mortgage products priced below 5% also fell sharply.
Excluding products available exclusively in Northern Ireland, Moneyfacts reported that the number of sub 5% fixed mortgages had fallen from 1,494 at the beginning of September to just nine by early October.
This doesn’t mean that every borrower was being offered a mortgage at around 6%.
Mortgage rates vary considerably depending on factors including the loan to value, mortgage type, fees and individual circumstances.
However, the figures illustrate just how significantly the overall market had changed in little more than a month.
October – Competition Starts to Return
After several difficult weeks for mortgage pricing, the middle of October brought some more positive news.
A number of lenders began reducing selected mortgage rates again.
HSBC and NatWest were among the major lenders announcing reductions, following earlier cuts from other lenders.
This was particularly interesting because lenders were starting to reduce some rates despite wholesale funding costs remaining relatively high.
It suggested that competition for mortgage business was beginning to play a greater role in pricing again.
Further reductions followed, including Accord cutting selected residential mortgage rates by up to 0.26%.
The changes don’t undo the increases seen during September, but they do show that mortgage pricing isn’t moving entirely in one direction.
Mortgage Rates Start to Stabilise
By the middle of October, the rapid increases seen during September had started to settle.
According to Moneyfacts, the average new mortgage rate stood at 5.88% on 15 October, unchanged since 8 October.
The average two-year fixed rate stood at 5.96%, while the average five-year fixed rate was 5.99%.
Both remained higher than a month earlier, but the fact that average rates had stopped increasing was encouraging after several weeks of repeated repricing.
There was also evidence of just how quickly individual mortgage products were changing.
This highlights why a mortgage product available today may not necessarily still be available several weeks later.
Inflation Rises to 3.5%
The latest inflation figures have added another element of uncertainty.
According to the latest figures from the Office for National Statistics, UK inflation increased to 3.5% in September, up from 3.1% in August.
Inflation therefore remains above the Bank of England’s 2% target.
Transport, particularly motor fuels, made the largest upward contribution to the increase, while underlying measures of inflation also increased.
The latest figure is important for mortgage borrowers because expectations about inflation can influence financial markets and the cost of funding fixed-rate mortgages.
As we saw last month, fixed mortgage rates don’t simply move when the Bank of England changes the Base Rate.
They can move beforehand as markets reassess what might happen to interest rates in the future.
What Happens Next With the Bank of England?
The Bank of England did not have a Monetary Policy Committee interest rate decision during October.
At its latest meeting in September, the Monetary Policy Committee voted by 6–3 to keep the Base Rate unchanged at 3.75%.
The three members who disagreed voted to increase it to 4.00%.
Since then, inflation has increased further from 3.1% to 3.5%.
The Bank of England’s next interest rate decision is due on 5 November 2026.
It would be unwise to try to predict that decision.
Whatever the Bank decides, the experience of the last few months shows that mortgage rates can move independently of an immediate change in Base Rate as funding costs, market expectations and lender competition change.
Our Thoughts
The last month has demonstrated both sides of the mortgage market.
September showed how quickly rates can increase when funding costs and market expectations change.
October has shown that competition between lenders can also result in rates being reduced, even when the wider economic picture remains uncertain.
For borrowers, particularly those approaching the end of an existing fixed rate, this makes planning ahead increasingly important.
Waiting for mortgage rates to reach a particular level can be difficult because nobody knows with certainty where they will move next.
Where appropriate, securing a suitable mortgage in advance can provide an option while the market continues to be monitored.
If rates subsequently improve, it may be possible to review the position before completion, subject to lender rules and any associated costs.
If rates increase, having an appropriate option already secured may provide some protection against further changes.
The latest rise in inflation is another reason not to assume that mortgage rates will simply continue falling because some lenders have recently announced reductions.
There are competing forces influencing mortgage pricing at the moment.
Inflation and funding costs remain challenging, while lenders are also competing for business.
Rather than trying to predict exactly what happens next, the important thing is to understand what the current market means for your own mortgage, start planning early and keep the options under review.
Information correct at time of writing – October 2026.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
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