Bank Rate Stayed at 3.75%. New Mortgage Rates Kept Rising.

The Bank of England left Bank Rate at 3.75% on 17 September, but the decision offers limited reassurance to borrowers shopping for their next mortgage. Three policymakers wanted an immediate increase to 4%, the Bank warned of greater inflation risks, and lenders have continued to raise the price of new fixed-rate deals.

The September Monetary Policy Committee decision was a 6–3 vote to hold. Megan Greene, Catherine Mann and Huw Pill preferred a quarter-point increase. For borrowers, the distinction matters: the rate set by the Bank has stayed still, while the fixed mortgage products available for a purchase, remortgage or lender switch have been moving.

An existing fixed-rate mortgage does not become more expensive during its fixed period because lenders increase their new-business rates. The exposure is at the next borrowing decision. Someone whose current deal expires this winter, or whose purchase has yet to reach a formal mortgage offer, may face a different choice from the one available even a week ago.

This Is the Next Stage of September’s Repricing Story

Willow’s 3 September report on rising wholesale rates highlighted the risk that more expensive funding would feed into mortgage products. Our 15 September update on HSBC, Nationwide and Santander tracked that pressure reaching major lenders. On 16 September, our coverage of Accord, TSB and Virgin Money showed the changes broadening into further increases and selected product withdrawals.

The MPC decision now adds the official policy position to that sequence. Borrowers no longer need to speculate about whether September’s meeting would produce a hold: it did. Yet that outcome has not reversed the repricing already seen across the mortgage market. Waiting for the announcement and finding that the Bank has held is not, by itself, evidence that the mortgage originally discussed remains available.

The Vote Was Unchanged. The Inflation Warning Was Stronger.

The 6–3 split needs context. The July MPC decision also held Bank Rate at 3.75%, with three members preferring 4%. Support for an immediate increase has therefore persisted through the summer. The more significant change is the Bank’s assessment that the inflation risks have worsened, alongside the actual lender increases now confronting borrowers.

The latest minutes describe a difficult balance. Higher energy costs threaten to keep inflation elevated, but weaker labour market conditions and borrowing costs already faced by households and businesses can restrain spending and price pressures. Three members judged an immediate rise appropriate; the majority chose to wait. The next decision will depend on the economic evidence and the Committee’s assessment of how price pressures are developing.

Why Fixed Mortgage Rates Can Rise During a Bank Rate Hold

A fixed mortgage commits a lender to an interest rate for a period of years. Its pricing reflects the cost of funding and managing that commitment, including wholesale interest-rate markets, as well as competition, capital requirements and lending appetite. Those markets respond continuously to expectations about inflation and future interest rates, rather than waiting for the MPC’s next announcement.

The Financial Times reported on 17 September that Santander, HSBC, Nationwide, Lloyds, Halifax, Barclays and TSB had increased fixed mortgage rates during the week. It also reported that two- and five-year swap rates had eased back on Thursday from Monday’s levels. That is a useful qualification: wholesale markets can reverse, but a daily fall does not require every lender to immediately restore withdrawn products or reduce mortgage prices.

Rightmove’s tables updated on 17 September put both its average two-year and five-year fixes at 5.39%. The weekly increases were 22 and 21 basis points respectively. Its figures use Podium data and products with fees of around £999; the stated coverage is 21 lenders representing approximately 95% of the mortgage market. These are market indicators, not a quotation for an individual borrower or a specialist large loan.

These distinctions, also explained in MoneyHelper’s guide to mortgage interest-rate options, are why a general headline about “interest rates staying the same” cannot tell a borrower what will happen to their payments. The existing contract and the next product being considered need to be assessed separately.

For a £1m Mortgage, Another Quarter Point Is Material

A 0.25 percentage-point difference on a constant £1m balance represents £2,500 of interest over a year, or roughly £208 a month. On £2m, the equivalent is £5,000 a year. These are simple interest-only illustrations, excluding fees and changes in the balance. They are not the change in monthly payments on a repayment mortgage, which depends on the rate, remaining term and capital being repaid.

The comparison is particularly relevant where a borrower has a limited choice of suitable lenders. A seven-figure loan combined with interest-only requirements, bonus income, company profits or an unusual property can require more detailed underwriting. A withdrawn product may therefore affect both the cost and the practicality of the proposed borrowing. A competitive headline rate is useful only if the lender can support the case.

When to Start a Remortgage Review

Borrowers whose fixed periods end within the next nine months can use an early review to establish the timetable, particularly where the loan or income needs specialist assessment. That does not mean a lender will reserve today’s rate for nine months. Application windows, offer validity and completion deadlines vary, and a product must remain suitable for the date on which the existing deal ends.

MoneyHelper recommends reviewing mortgage options ahead of a fixed deal ending, with guidance to begin shopping around at least six months before reversion. For a complex case, preparation can start earlier: confirm the outstanding balance, obtain income evidence, check the current early repayment charge and establish whether the borrowing requirement will change. Preparation need not mean redeeming the existing mortgage early.

Compare the Existing Lender and Check the Ability to Change

A product transfer with the current lender can remain the appropriate answer. It may involve less administration and avoid some costs of moving lender. Its rate and terms still deserve comparison with the wider market, including product fees, incentives, valuation and legal costs, early repayment charges and any change in the repayment period. A lower advertised rate does not automatically produce a better overall result.

Where an acceptable option can be reserved, ask what happens if pricing improves before completion. Some lenders permit a change to a cheaper product; the rules, deadlines and consequences vary. A switch may require updated documents, a revised offer, further checks or fees. The objective is to secure a workable option while retaining whatever flexibility is actually available, rather than assuming a future reduction will be passed on automatically.

If a product transfer or mortgage offer is already in place, establish what has been reserved and whether changing it could surrender that position. Do not cancel an existing option merely because a cheaper illustration appears elsewhere. The replacement needs to be viable, its conditions understood and the completion timetable achievable. Likewise, a buyer approaching exchange should resolve outstanding finance questions with their adviser and solicitor before becoming contractually committed.

Large Mortgage Liabilities Belong in the Wider Wealth Review

For accountants and wealth managers, the September update provides a practical reason to ask when a client’s mortgage next changes. A substantial loan can affect cash flow, planned withdrawals, business distributions and the timing of an asset sale. Advisers do not need to predict the next MPC vote to identify a refinancing deadline that deserves attention or bring the relevant mortgage specialist into the discussion.

How Willow Private Finance Can Help

Willow can review residential purchases and remortgages against the client’s current mortgage, completion date and wider plans. For £500,000 to £5m-plus borrowing, that can include mainstream large-loan lenders, specialist banks and appropriate private-bank routes, alongside the existing lender’s offer. Income treatment, interest-only terms, fees and repayment flexibility are assessed with the rate.

If advice has already been provided but the application has not progressed, the immediate task is to check that the recommended product remains available and suitable. If refinancing is further away, the task is to establish when an application can be made and what evidence will be needed. September’s hold removes uncertainty about this meeting; it does not remove the need to manage the next mortgage decision.