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Post updated: September 29th, 2026
KEY INFORMATION
Speaking on 25 September, Governor Andrew Bailey said: “We haven’t increased bank rates but it’s going to get harder to maintain that stance as energy prices remain higher.”
What markets expect to happen to interest rates has a direct impact on future fixed-rate mortgage pricing. Swap rates – which reflect market expectations for future interest rates – are the primary benchmark for pricing fixed-rate mortgages in the UK, although other factors such as competition also play a role.
If swap rates rise because markets expect higher interest rates, lenders typically increase mortgage rates. Conversely, falling swap rates can lead to cheaper fixed-rate mortgage deals.
The outlook for interest rates has changed sharply since the conflict in the Middle East pushed up energy prices and increased concerns about inflation. Swap rates have risen sharply again in September as markets have increasingly expected UK interest rates to rise. This has prompted many lenders to increase their fixed mortgage rates, with a number of major lenders repricing more than once this month.
Further increases are possible, although mortgage pricing also depends on other factors.
If your mortgage deal ends in the next six months, consider reviewing your options now. You may be able to lock in a rate in advance and keep it under review in case a better deal becomes available before you need to switch.
Get fee-free remortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage. Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
Speaking on 17 September 2026, our Mortgage Expert Sarah Tucker said: “The Bank of England has held Bank Rate at 3.75%.
“This is a welcome relief for homeowners currently sitting on a tracker rate mortgage, as their monthly payments will track the Bank of England base rate, and with inflation increasing to 3.1% there were growing concerns that this could lead to a base rate rise.”
“The Bank of England Monetary Policy Committee next meets on 5 November, and this will be an interesting one as it’s right after the Autumn Budget on 28 October. By then we’ll have seen the market reaction to any Budget announcements and the MPC will be taking it all into account.
“If you have a fixed rate mortgage, this news doesn’t directly affect you or your monthly payments, but it could have an influence on the wider market. If your remortgage is due in the next 6 months, our advice is to speak to an adviser as early as possible. They can secure you a new rate in advance, and if rates do drop again they can switch you to a better deal”.
Interest rate predictions are notoriously difficult at the best of times, but the complexity of the current situation in the Middle East makes it even harder.
Analysts remain divided over what will happen to interest rates. However, a growing number of economists now expect the Bank of England to raise rates, with several forecasting a rise in November if energy prices remain high.
Here is a selection of economists’ UK interest rate forecasts for 2026:
However, what happens with interest rates in 2026 will depend on numerous factors. You can keep up to date by bookmarking our guide to best mortgage rates in the UK or signing up to our weekly newsletter. weekly newsletter.
Need to remortgage? Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Mortgage rates have started rising again as the conflict in the Middle East pushes up costs for lenders. Many lenders began increasing fixed rates in September, with some major lenders repricing more than once in recent weeks.
Experts warn that it’s a reminder of how quickly markets can shift. By contrast, at the start of August, average fixed mortgage rates were falling at their fastest monthly pace in almost two years.
Whether mortgage rates come down again will depend largely on what happens to swap rates. If swap rates fall, fixed mortgage rates may follow, while further increases could push mortgage rates higher. With the outlook uncertain, lenders may continue to change their deals at short notice.
This unpredictable outlook comes as little surprise to the UK public. In our 2026 research, we found that around a quarter of Brits expect rates to rise (23%) and a similar proportion think they will fall (25%), while 28% expect them to stay the same and 24% are unsure.
But there are many factors at play, which makes an accurate mortgage rate forecast difficult to make. Read more in our guide on Mortgage rate predictions.
Get personalised advice by speaking to the award-winning expert advisers at Mortgage Advice Bureau. Compare deals or speak to an adviser today.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage. Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
Key Bank of England interest rate decision dates:
The Bank of England publishes a calendar of future committee meeting dates here.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Many people want to know the UK interest rate forecast for the next 5 years. However, long-term UK interest rate forecasts should be treated with caution. The Office for Budget Responsibility (OBR) bases its forecasts on market expectations for future interest rates, but these expectations can change significantly as economic conditions evolve.
For example, in its Economic and Fiscal Outlook published in March 2026, its UK interest rate forecast was that rates would continue to fall in 2026, before rising to around 4% in 2031. However, interest rate forecasts have changed significantly since March due to the conflict in the Middle East.
Financial markets are pricing in around four quarter-point interest rate rises by the end of 2027, although expectations are changing quickly. However, Bank of England Governor Andrew Bailey has stressed that rate rises are not inevitable and the outlook will depend on economic and geopolitical developments.
Forecasts beyond 2027 are even more uncertain and could change significantly as the outlook for inflation and the economy develops.
The Bank of England’s terminal rate is the level interest rates are expected to reach at the end of a cycle of rate changes. This could be the peak of a rate-rising cycle or the lowest point of a rate-cutting cycle, before rates are held or change direction.
Other types of borrowing are affected in a similar way. If interest rates go up, borrowing can generally get more expensive, while when interest rates are cut, borrowing can generally get cheaper.
However, the amount you’ll pay on things like credit cards and loans will depend on a number of factors including your credit history.
The latest CPI reading shows the UK inflation rate stands at 3.1%.
After peaking at 5.25% in 2023 and 2024, the Bank of England base rate has fallen to 3.75%. The Bank held rates at 3.75% on 17 September but warned they may need to rise if the Middle East conflict continues and higher energy prices lead to more persistent inflation.
The Bank of England held interest rates at 3.75% on 17 September. Analysts remain divided over what will happen to interest rates. However, a growing number of economists now expect the Bank of England to raise rates, with several forecasting a rise in November if energy prices remain high.
UK interest rate forecasts influence swap rates, which are a key factor in fixed-rate mortgage pricing. Expectations of future interest rate cuts can help push mortgage rates lower, while forecasts of higher rates can have the opposite effect.
An interest rate cut in 2026 looks increasingly unlikely. A growing number of economists now expect rates to rise instead, although some forecasters still expect Bank Rate to remain at 3.75%. However, expectations can change as the economic outlook develops.
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