Why Are Mortgage Rates Rising When the Base Rate Is on Hold? (September 2026)
The Bank of England held rates at 3.75%, yet fixed mortgage rates keep climbing. Here is how swap rates drive fixed deals, what it means for buy-to-let stress tests, and what borrowers can do now.
Quick answer: The Bank of England held the Bank Rate at 3.75% on 17 September 2026, yet fixed mortgage rates kept rising. Between early August and mid-September the average two-year fix rose from 5.63% to 5.73% and the average five-year fix from 5.66% to 5.78%, according to Moneyfacts. Fixed mortgage rates are priced off swap rates, which follow where markets expect the Bank Rate to go, not where it is today. With inflation at 3.1% and forecast to pass 4% early next year, markets expect rate rises, so swap rates and fixed mortgage rates have moved up first. The next Bank Rate decision is on 5 November 2026.
It feels contradictory. The headline says "interest rates held", but the mortgage deal you were quoted last month has gone up, and lenders are repricing their fixed rates for the second time in a few weeks. For landlords the effect is sharper still, because buy-to-let affordability is tested at a stressed rate above the pay rate. This guide explains why mortgage rates can rise while the Bank Rate stands still, what is driving it in September 2026, and what borrowers and landlords can do about it.
What did the Bank of England decide in September 2026?
At its meeting ending on 16 September 2026, announced on 17 September, the Monetary Policy Committee voted 6 to 3 to hold the Bank Rate at 3.75%. The Bank Rate is what most people call the base rate. The three dissenting members voted to raise it to 4%. It was the sixth hold in a row, but the split vote is the important detail: a third of the committee already wanted a rise.
The reason is inflation. CPI inflation rose to 3.1% in August 2026, up from 2.9% in July, led by motor fuels. The Bank expects inflation to reach around 3¾% in the final quarter of 2026 and slightly above 4% in early 2027, driven by an energy shock linked to conflict in the Middle East. Brent crude and UK wholesale gas prices had risen by 36% and 78% respectively since the period before the Bank's July forecast.
Why are mortgage rates rising if the Bank Rate is on hold?
Because fixed mortgage rates are not set from today's Bank Rate. When a lender offers a two-year or five-year fix, it funds that promise in the wholesale market, typically through swap rates. A swap rate is the fixed rate the market will pay for a set period in exchange for a floating rate, so it reflects what investors expect the Bank Rate to average over that period.
If markets expect the Bank Rate to rise, swap rates rise now, and lenders' cost of offering a fixed mortgage rises with them. In its September minutes, the Bank noted that the UK short-term interest rate curve was upward sloping and had risen further, peaking at around 4.9% by the end of 2027. In other words, markets are pricing in rate rises, even though the Bank has not yet made one.
Lenders reprice in batches rather than every day, so fixed mortgage rates usually follow swap rates with a lag of a few weeks. When swap rates rise quickly, several lenders reprice at once, which is exactly what borrowers have seen in September 2026.
| Average fixed mortgage rate (Moneyfacts) | Early August 2026 | 15 September 2026 |
|---|---|---|
| Two-year fix | 5.63% | 5.73% |
| Five-year fix | 5.66% | 5.78% |
| Bank Rate | 3.75% | 3.75% |
Tracker mortgages work differently. They move with the Bank Rate itself, so they have not risen yet, but they will if the Bank raises rates.
What rising mortgage rates mean for landlords
Buy-to-let borrowers feel higher mortgage rates twice: once in the monthly payment, and again in how much they can borrow. Lenders follow the Bank of England's buy-to-let underwriting standards, which test affordability at a stressed rate: for fixes shorter than five years, at least the higher of 5.5% or 2 percentage points above the pay rate. Lenders can test five-year fixes at the pay rate instead.
That rule makes the choice of product more important as rates rise. Take a £200,000 interest-only buy-to-let mortgage and a lender that requires rent to cover 125% of the stressed interest:
| Product | Pay rate | Stress rate | Rent needed each month |
|---|---|---|---|
| Two-year fix | 5.73% | 7.73% | about £1,610 |
| Five-year fix | 5.78% | 5.78% | about £1,204 |
On these illustrative figures, the five-year fix needs about £400 a month less rent to pass the same test, which can be the difference between borrowing the full amount and not. Higher-rate taxpayers usually face a 145% interest cover ratio, which widens the gap further. Check your own numbers with our buy-to-let affordability calculator, and see our guide to buy-to-let mortgages for the full rules.
Rising mortgage rates also squeeze cash flow on existing portfolios as fixed deals end, and they matter for value-add strategies. A BRRR refinance that worked at 4.5% may not pass at 5.8%, so stress-test the refinance before you buy. Our BRRR lenders guide covers which lenders refinance on which terms.
What should borrowers do now?
- If your fix ends within about six months, secure a rate now. Most mortgage offers are valid for around six months, and many lenders let you switch to a cheaper product if rates fall before completion. Securing a rate costs little and protects you against further rises.
- Compare two-year and five-year fixes on the total cost, not just the rate. Arrangement fees can outweigh a small rate difference. Our remortgage break-even calculator shows when switching pays for itself.
- Think carefully before choosing a tracker. A tracker is cheaper only if the Bank Rate stays flat or falls. Markets currently expect the opposite.
- Stress-test your rental cash flow. Rerun each property's figures at a mortgage rate 1 to 2 points higher using our mortgage repayment calculator and rental yield calculator.
- Use a broker. Buy-to-let pricing changes quickly and varies widely by loan-to-value and fees. A whole-of-market broker sees repricing before it reaches comparison sites.
Will mortgage rates keep rising?
Nobody knows for certain. The next Bank Rate decision is on 5 November 2026, and market pricing points to rises over the next year. But market expectations can change quickly. If the energy shock fades or the economy slows, swap rates can fall, and fixed mortgage rates would follow them down within weeks, without the Bank Rate moving at all. The practical approach is to secure what you need now and keep the option to switch.
Frequently Asked Questions
Why did my mortgage offer go up when interest rates were held?
Fixed mortgage rates follow swap rates, which reflect where markets expect the Bank Rate to go. Markets expect rises, so swap rates and fixed mortgage rates rose even though the Bank Rate stayed at 3.75%.
What is the Bank of England base rate in September 2026?
3.75%, held on 17 September 2026 by a 6 to 3 vote, with three members voting to raise it to 4%.
When is the next Bank of England rate decision?
5 November 2026.
Is a two-year or five-year fix better for buy-to-let?
It depends on your plans and costs, but five-year fixes can be tested at the pay rate rather than a stressed rate, so they often let you borrow more against the same rent. Compare the total cost, including fees, over the period you expect to hold the loan.
Do trackers go up if the Bank Rate is held?
No. Tracker rates move with the Bank Rate, so they only rise if the Bank raises rates. Fixed mortgage rates are the ones that move ahead of a decision.
Key Takeaways
- The Bank Rate was held at 3.75% on 17 September 2026, but three of nine committee members voted for a rise.
- Fixed mortgage rates follow swap rates, which price in expected future rate rises, so they rose while the Bank Rate stood still.
- Average two-year fixes rose to 5.73% and five-year fixes to 5.78% by mid-September.
- For landlords, five-year fixes are often easier to borrow on because they can be stress-tested at the pay rate.
- If your fix ends soon, securing a rate now protects you, and most offers let you switch if rates fall.
This article is general information, not mortgage or financial advice. Rates change daily and the figures above are averages at the dates shown. Speak to a qualified mortgage broker before choosing a product.