The Bank of England held the base rate at 3.75% on 17 September 2026. A fortnight either side of that decision, lender after lender put their fixed rates up. If you are wondering why your mortgage is getting more expensive when the headline rate has not moved at all, you are asking exactly the right question, and the answer is simpler than the industry usually makes it sound.
Fixed rate mortgages are not priced off the base rate. They are priced off swap rates. Once you understand what a swap rate is and why it moves, the news stops being confusing and starts being useful. This guide explains it in plain English, shows what happened in September 2026, and sets out what it means if your deal is ending, if you are buying, or if you are sitting on a variable rate right now.
The Bank of England base rate is what the Bank charges commercial banks to borrow overnight. It directly drives two things on your mortgage: tracker rates, which are contractually tied to it, and standard variable rates, which lenders set themselves but usually move in sympathy with it.
A fixed rate is a different animal. When a lender offers you 5% fixed for five years, it is promising to charge you the same rate for five years regardless of what the Bank of England does in that time. To make that promise safely, the lender has to know what its own funding will cost over those five years. It cannot know that from a rate that could change eight times a year. So it goes to the swap market instead.
An interest rate swap is an agreement between two institutions to exchange one kind of interest payment for another. In the simplest version, a lender agrees to pay a fixed rate to a counterparty for an agreed number of years, and in return receives a variable rate.
Think of it the way a lender does. Money comes in at variable rates, from savers and from money markets, and the lender wants to lend a chunk of it out at a fixed rate. That mismatch is a risk: if rates shoot up, the lender's costs rise while its mortgage income stays fixed. A swap removes it. The lender locks in a fixed cost of funds for five years, then prices its five year mortgage on top.
The swap rate is effectively the wholesale price of fixed money. A lender takes the relevant swap rate, adds a margin to cover its costs, its capital requirements, expected losses and its profit, and that is broadly your mortgage rate. When the two year swap rate rises, two year fixed mortgage pricing follows it. When the five year swap falls, five year fixes get cheaper. The base rate is barely in the conversation.
This is also why the gap between two year and five year fixes changes. If markets expect rates to fall over the next few years, longer swaps can price below shorter ones, and five year fixes can end up cheaper than two year fixes. If markets expect trouble further out, the opposite happens. Our guide on choosing between a two or five year fixed rate goes through how to weigh that up for your own situation.
Here is the part that catches people out. Swap rates are set by what markets expect to happen, not by what has already happened. By the time the Bank of England announces a decision, the swap market has usually priced that decision in weeks earlier. That is why mortgage rates often move ahead of a base rate announcement and then barely flinch on the day itself.
It also means swap rates react to things the base rate does not: inflation data, wage figures, government borrowing plans, energy prices, and events overseas. A jump in the oil price on the other side of the world can push your five year fixed rate up without the Bank of England doing anything at all.
The Monetary Policy Committee voted on 17 September 2026 to maintain the base rate at 3.75%. The vote was six to three, and according to the Bank of England's own minutes, the three members in the minority voted to increase the rate to 4%. That is a meaningful detail. A year ago the argument inside the Committee was about how quickly to cut. Now part of it is about whether to raise.
The reasoning was mostly energy and inflation. The September minutes record CPI at 3.1% in August, with Brent crude up around 36% and UK wholesale gas up around 78% since July. On that basis the Bank projected inflation moving slightly above 4% in early 2027, with risks tilted to the upside.
Markets read the same information and drew the obvious conclusion: rate cuts are further away than they thought, and a rise is no longer unthinkable. Swap rates climbed accordingly. On 7 September 2026, Moneyfacts warned through the trade press that higher mortgage rates were now effectively inevitable, with swap costs at their highest level in three years.
Lenders then did what lenders do. They repriced. Not because the base rate moved, but because the cost of the fixed money behind their fixed rate products had gone up.
One of the odder things you will notice in a month like this is that some lenders raise rates while others cut. It looks like chaos. It is not.
Every lender has its own funding mix, lending targets and appetite for particular business. One that is behind on its yearly volume may absorb a higher swap rate and hold pricing to win cases. One that has already written more than it planned will push rates up to slow the flow. A building society funded by savers moves differently from a bank funded by wholesale markets, and a lender chasing first time buyers may sharpen rates at 90% or 95% loan to value while raising them everywhere else.
The practical consequence is that the market does not move as one. In any given week there is a spread between the best and worst available deal for your exact circumstances, and that spread is often wider than the movement everyone is worrying about in the news. Which is precisely why looking across the whole market matters more when rates are moving, not less.
For context rather than as a quote, Uswitch's rate tracker, updated 25 September 2026, put the average two year fixed rate at 75% loan to value at 5.69% across all lenders and 5.28% across the big six, with the average five year fixed at 5.75% and 5.24% respectively. The average standard variable rate stood at 7.25%.
That last figure is the one worth staring at. The gap between a fixed rate and a typical SVR is large, and it is the single most expensive mistake available to a homeowner right now. Rates that are not ideal are still a great deal better than no rate at all.
These are market averages on one day and they will have changed since. Your own figure depends on your loan size, your loan to value, your credit profile and the lender's criteria.
Start now. Most lenders let you secure a new rate up to six months ahead of your current deal ending, and there is usually nothing stopping you switching to a better product if pricing improves before completion. Securing a rate early is not a bet on the market. It is a free option: you keep the rate if things get worse, and you can usually move if things get better. Our guide on how early you can remortgage sets out the timing, and product transfer versus remortgage covers whether to stay put or move lender.
Build a buffer into what you can afford, and get the lender choice right before you offer on anything. In a rising market the rate you were quoted six weeks ago may not be there when you apply, and the difference between lenders at higher loan to value is significant. Get an agreement in principle and keep it current.
Do not wait for a better week. There is no early repayment charge on an SVR, so you can move at any time, and every month spent on it costs money that you will not get back. Our guide on what to do when your fixed rate ends walks through the options.
Your rate follows the base rate, which has not moved. But the reason fixed rates are rising, that markets now see a rise as possible, is also a reason to think about how much of an increase your budget could absorb. Our comparison of fixed versus tracker mortgages goes through the trade offs properly.
Do not wait for the base rate to fall before acting. Fixed rates do not wait for it either. By the time a cut is announced, the pricing has already reflected it.
Do not assume your own lender's renewal letter is the best available. It might be. It is also the only rate that lender is going to show you, and it has no reason to mention what anyone else is charging.
Do not try to time the bottom. Nobody, including the Bank of England, knows where rates will be in six months. Our piece on why you should stop worrying about mortgage predictions explains why forecasts make poor foundations for a decision this size.
Because fixed rate mortgages are priced off swap rates, not the base rate. Swap rates reflect what markets expect interest rates to do in future, and those expectations shifted upwards through September 2026 as inflation and energy prices rose.
It is the wholesale price a lender pays to lock in a fixed cost of money for a set number of years. Your fixed mortgage rate is broadly that price plus the lender's margin.
Yes, if you are on a tracker or a standard variable rate. Trackers are contractually linked to it and SVRs usually follow it. If you are on a fixed rate, the base rate has no effect until your deal ends.
Nobody can say. The Bank of England's September 2026 projection had inflation moving slightly above 4% in early 2027, which does not point to quick cuts, but projections change with the data. It is not a sensible basis for delaying a decision.
Usually yes. A mortgage offer is typically valid for several months, and if pricing improves before you complete, we can look at moving you to a better product. That is part of the job, not an extra.
You cannot control swap rates and neither can we. What you can control is whether you have a rate secured, whether it is the best one available for your circumstances, and whether you are about to drift onto a standard variable rate by accident.
Send us the date your current deal ends and we will compare the whole market against whatever your existing lender has offered you, with no pressure either way. You can read more about how we work on our remortgage page, or get in touch or call 03300 432 428.
Your home may be repossessed if you do not keep up repayments on your mortgage. Figures quoted in this guide come from the sources and dates named and will have changed since. They are illustrations, not a quote or a recommendation, and any advice should be based on your own circumstances.
