Why 750,000 homeowners are facing a mortgage rate cliff edge
Around 750,000 UK households coming off a fixed mortgage deal this year are currently paying a rate below 3%. The average two-year fix they’re likely to be offered instead is 5.73%. That gap, not this week’s inflation figure or the Bank of England’s decision, is the story that actually matters if you’re one of them.
Fewer people are getting ahead of it, too. FCA figures show the number of borrowers locking in a new rate up to six months early fell from 499,271 in the first quarter of this year to 381,364 in the second. Meanwhile, lenders raised rates twice in the space of a week, inflation climbed to 3.1%, and the Bank held steady for the sixth meeting running.
Last updated: Friday 18 September 2026.
This week at a glance
| Around 750,000 households on sub-3% mortgages are due to refinance this year, into a market where the average two-year fix now sits at 5.73% | |
| Fewer people are locking in early. FCA data shows the number securing a rate six months ahead of maturity dropped from 499,271 to 381,364 between Q1 and Q2 2026 | |
| Inflation climbed to 3.1% in August, its second consecutive monthly rise | |
| The Bank of England held at 3.75% for the sixth meeting running, the same 6-3 split as July | |
| Lenders raised fixed rates twice in one week. NatWest, Santander, HSBC and TSB repriced early in the week, then NatWest, TSB and Coventry raised again on the 16th, explicitly ahead of Thursday's decision | |
| A Saudi pipeline outage is behind most of it. Brent spiked to $108 mid-week before easing as Saudi Arabia found workarounds, and that swing is what actually moved swap rates |
The cliff edge, in numbers
This is worth sitting with for a moment, because the scale of it is easy to skim past.
The sub-3% cliff edge
750,000
Households on sub-3% deals refinancing this year
5.73%
Average two-year fix they're likely to be offered
£456
Added per year for every further 0.25% rise
Source: Bank of England estimate and Moneyfacts calculation, reported 15 September 2026.
Rates below 2% were still available as recently as February 2022. For someone on one of those deals refinancing now, the jump isn’t an adjustment, it’s a different mortgage entirely. Moneyfacts calculated that every further 25 basis points on a typical two-year fix adds around £38 a month, or £456 a year, and borrowers who fixed for five years and aren’t due to refinance until 2027 have the least room to plan around any of it.
What actually happened to rates this week
Two lenders’ waves, not one. Early in the week, NatWest, Santander, HSBC and TSB all increased rates for the second time since the start of September. By the 16th, NatWest had raised again, some products by as much as 43 basis points, and TSB and Coventry Building Society followed on the same day, explicitly ahead of Thursday’s Bank of England decision.
Two waves of rate rises this week
The average two-year fix has now risen 89 basis points since the start of March, from 4.84% to 5.73%. One analyst called it an unwelcome rate shock, which feels about right.
The usual suspects: inflation, the base rate, and oil
By now the mechanism behind these weeks won’t be news to you if you’ve been following this series. Swap rates move on where the market expects things to go, not on the headline inflation print or the base rate decision itself, and this week is another example of that. August’s CPI came in at 3.1%, its second straight monthly rise, and core inflation held flat at 2.6%. The Bank held at 3.75% the next day, on the same 6-3 vote as July.
What actually pushed lenders to reprice was a Saudi pipeline outage. The East-West Crude Oil Pipeline, a route that bypasses the Strait of Hormuz entirely, was damaged and shut down around 10 to 11 September, and Brent jumped back to $108 within days. It eased through the back half of the week as Saudi Arabia announced ship-to-ship transfers and a faster repair timeline than first feared, settling near $101 by Wednesday. That’s still up close to 14% on the month and over 50% year on year.
Average mortgage rates this week
Average mortgage rates this week
| Product | This week | Change | |
|---|---|---|---|
| Two-year fixed | 5.73% | +0.89pp since March | |
| Five-year fixed | 5.78–5.82% | Up on last month | |
| Bank of England base rate | 3.75% | Held, 6th meeting |
Two different five-year figures were published this week, 5.78% on Tuesday and 5.82% on Wednesday, likely reflecting different data cuts rather than a genuine day-on-day move of that size. Both are shown here rather than picking one, since neither can be verified as more authoritative than the other.
What to watch next week
What to watch next week
| Oil prices, still the clearest lead indicator. Whether Saudi Arabia's pipeline workarounds hold will likely matter more than anything the Bank of England does in the short term | |
| Anyone on a sub-3% deal maturing this year. This is now the single most consequential group in the market, and the data suggests too many are leaving the decision late | |
| Buy-to-let clients specifically, given the BTL-focused rises from NatWest, TSB and Coventry this week | |
| The next CPI print and MPC decision. Exact dates for the next cycle weren't confirmed in this week's coverage, we'll flag them as soon as they land |
What this means for you
If your fixed rate started with a 1 or a 2, this is genuinely the group to act fastest. The gap between what you’re paying and what’s available has never been wider this year, and fewer people are getting ahead of it than they were six months ago. Reserving a rate now costs nothing, and if pricing improves before you complete, you can usually switch.
If you’re a landlord, check your numbers against this week’s actual rates rather than what you last modelled a quarter ago. A 30-plus basis point move on a BTL product is a meaningful dent in yield, and it’s easy to miss if you’re not looking for it.
Everyone else within six months of a remortgage: the advice hasn’t really changed shape this year, even as the numbers keep moving. Lock in early, keep the option to switch down, and don’t let a quiet week convince you the trend has settled.
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Frequently Asked Questions this Week
How many people are affected by the mortgage rate cliff edge?
Around 750,000 UK households due to come off a fixed deal this year are currently on a rate below 3%, according to Bank of England estimates. Many will be moving to rates well above 5%, a significant jump for anyone who fixed when sub-2% deals were common.
Why did mortgage rates rise twice in one week?
NatWest, Santander, HSBC and TSB raised rates early in the week as swap rates climbed above 4.7%. NatWest, TSB and Coventry Building Society then raised again on 16 September, explicitly ahead of the Bank of England’s decision the following day.
What is UK inflation in August 2026?
CPI rose to 3.1% in the 12 months to August, up from 2.9% in July. It was the second consecutive monthly increase, with transport and fuel costs the biggest contributor.
Did the Bank of England raise interest rates in September 2026?
No. The base rate was held at 3.75% on 17 September, the sixth consecutive hold. Three of nine committee members voted for a rise to 4%, the same split as the July decision.
Why are fewer people locking in a mortgage rate early?
FCA data shows the number of borrowers securing a new rate up to six months before their deal ends fell from 499,271 in the first quarter of 2026 to 381,364 in the second. The reasons aren’t fully clear from the data itself, but it means a growing number of people are leaving the decision closer to their deal’s expiry, right as rates have been rising.
Should I lock in a rate now if mine is ending this year?
If your current rate is well below what’s available now, yes, generally sooner is better. Most lenders let you reserve a rate ahead of time and switch to something cheaper if pricing improves before completion, so there’s little reason to wait.
Your home may be repossessed if you do not keep up repayments on your mortgage.
This article is for information only and does not constitute financial advice. Rates quoted are accurate as at the dates stated and are subject to change or withdrawal without notice. Sources: Office for National Statistics, Bank of England, Financial Conduct Authority, Moneyfacts, and UK mortgage trade press published 14 to 18 September 2026.