Your Mortgage Might Be About to Get More Expensive Again, Here's What to Do About It
Last week I wrote about what's actually confirmed, expected and just noise for your money this autumn, in What's Actually Coming for Your Money This Autumn. This week I want to zoom in on the bit that's probably landed closest to home for a lot of you: mortgages.
For most of this year, the story was that rates were heading down, slowly, but down. Then the conflict in the Middle East pushed energy prices up, inflation came in hotter than expected, and the whole conversation flipped. If you've been holding out for your remortgage quote to come in lower than your current deal, you might have noticed it hasn't been going that way.
Why Are Mortgage Rates Rising Again in the UK? Mortgage rates have risen because inflation has come in higher than expected, driven largely by the conflict in the Middle East pushing up energy costs. That's shifted market expectations from interest rate cuts to possible rises, and lenders have priced that shift into their mortgage offers.
What's actually changed
A few things here have actually happened, not just been predicted. Average two year fixed mortgage rates are sitting around 5.77%, and five year fixes around 5.83%, as of 17 September, according to Moneyfacts, both higher again than they were even a fortnight ago. Bank of England Governor Andrew Bailey told MPs earlier this month that UK mortgage rates are already roughly three quarters of a percentage point higher than before the Middle East conflict began, one of the largest increases anywhere in the G7.
The Bank of England's Monetary Policy Committee met on 17 September and held the base rate at 3.75%, its sixth hold in a row. But it wasn't a comfortable decision: three of the nine members voted to raise it straight to 4%, the closest split of the year, a day after the confirmed August inflation figure came in at 3.1%, higher than July's 2.9%. Markets are now pricing in the possibility of several rate rises over the next year rather than just one, with the next decision due on 5 November.
None of this is really about anyone doing anything wrong. It's a global shock working its way through energy prices and into the cost of borrowing, and it happens to be landing at a time when a lot of households were expecting things to go the other way.
If your fixed deal is ending in the next year or so
This is where it stops being background news and becomes a decision you actually have to make. A few things tend to help, whatever the exact numbers end up being by the time your deal ends.
What tends to help if a remortgage is coming up:
Check your exact renewal date, not just "some time next year"
Ask your lender or a broker about locking in a rate early, most allow this three to six months ahead
Compare your current lender's retention rate too, switching isn't automatically cheaper
Stress test the higher likely payment against your actual monthly budget now, not later
Speak to a mortgage broker or adviser before assuming the worst case is your case
Whether locking in early makes sense depends on your own deal, your timeline and how much you value certainty over flexibility, which is exactly the sort of thing worth talking through with a broker rather than guessing from a headline.
"You can't do much about what the Bank of England decides. You can do a lot about how ready you are for it either way." The UK Money Coach
The bit that hasn't changed
Back in May last year, I wrote about whether it made sense to overpay your mortgage, in Overpay Your Mortgage in 2025?, at a time when rates looked set to keep falling. Some of the specific numbers in that post have moved on, rates clearly haven't kept dropping the way it looked like they might. The underlying logic hasn't, though, and it's worth repeating here.
Overpaying only tends to make sense once you've got a proper emergency buffer in place and you're not carrying expensive debt elsewhere. That was true when rates looked like they were falling, and it's just as true now they've turned back up, arguably more so, since a buffer matters even more when your future payments are less predictable. The number on your mortgage offer changes, but the order you tackle things in doesn't: buffer first, expensive debt second, then decide about overpaying versus investing.
Some people manage a rate rise by obsessively refreshing comparison sites the moment their deal is due. Others would rather not think about it until the renewal letter physically arrives. Neither approach is wrong, but the second one works a lot better if you've at least checked your renewal date and roughly what you can afford to pay, so that when the letter does arrive, it's a decision rather than a scramble.
If you're weighing up buying at all in this climate rather than just remortgaging, that's a slightly different question, and one I looked at in How to Check If You Can Really Afford to Buy a Home in the UK.
Let's Sort This Out Together
If you know your fixed deal is ending sometime in the next year and you'd rather get ahead of it than wait for the letter, a free Q&A call is a good place to start talking it through.
And if you want a proper look at how a higher mortgage payment fits against everything else, savings, debt, pension, the whole picture rather than just the mortgage in isolation, an Insight Session is built for exactly that. Book an Insight Session if that sounds like the right fit.
About the author: Vig Sivagnanam is The UK Money Coach, helping professionals and families align their money with the life they actually want. He works with clients across the UK on financial clarity, planning and implementation, without the jargon.
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