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Base rate held again: so why are mortgage rates rising?
Bank of England maintains the rate at 3.75% in September
Sam covers personal finance topics, from the best savings rates to the reasons mortgage lenders say no. He enjoys crunching the numbers to help consumers get ahead.
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The Bank of England's nine-member Monetary Policy Committee (MPC) voted 6-3 in favour of holding the base rate for the sixth month in a row.
But how will this decision affect mortgage rates, and did the MPC give any indication of what could happen to the base rate for the rest of 2026?
Read on to find out what the decision means for you – whether you're buying a home, remortgaging or trying to get the best return on your savings.
Why has the Bank of England held the base rate?
September's decision was made against the backdrop of rising oil prices, caused by conflict in the Middle East and inflation creeping up to 3.1% in August. The MPC noted that the market prices of oil and UK wholesale gas have risen by 36% and 78% respectively since the period leading up to the July decision.
In addition, both the European Central Bank and US Federal Reserve increased rates in September. It was the first time in three years that the Federal Reserve put up interest rates.
Despite all this, the MPC has not raised the base rate on this occasion.
The MPC remains concerned about the knock-on effect of conflict in the Middle East on the UK economy, but determined that there was not enough evidence of this driving inflation to increase the base rate at this time.
Why are mortgage rates rising?
While the base rate will remain at 3.75%, fixed-rate mortgages have jumped up over the past few weeks.
The Bank of England base rate is an important metric in determining tracker mortgage rates. But for fixed-rate mortgage products, forecasts of what will happen to the base rate over the coming years are also critical. As oil prices have increased due to further conflict in the Middle East, the likelihood of a near-term base rate rise has increased. As a result, the cost of offering fixed-rate mortgages has risen for lenders, leading to rate increases.
In the past week, some lenders have increased rates by almost half a percentage point. For example, Santander hiked fixed rates by up to 0.45%.
Rate cuts could return if the conflict in the Middle East cools. Once again, UK borrowers are at the behest of events a long way away.
Here are the best two-year fixed rates for first-time buyers:
| 60% | Barclays | 75% | 4.75% | £899 | 5.74% |
| 60% fee free | Barclays | 75% | 4.93% | £0 | 5.74% |
| 70% | First Direct | 73% | 4.89% | £490 | 6.24% |
| 70% fee free | First Direct | 73% | 5.04% | £0 | 6.24% |
| 80% | Leeds Building Society | 68% | 4.97% | £999 | 7.74% |
| 80% fee free | First Direct | 73% | 5.16% | £0 | 6.24% |
| 90% | First Direct | 73% | 5.15% | £490 | 6.24% |
| 90% fee free | First Direct | 73% | 5.28% | £0 | 6.24% |
Tracker mortgages offer lowest rates
If you're looking for the lowest-possible rate, trackers continue to be the only mortgage type that offers rates of less than 4%. But the sub-4% mortgage is a dying breed. At the start of July, there were 17 and now (17 September) there is just one.
However, most borrowers will not be able to access this deal, as it's only available to Premier customers. To be a Barclays Premier customer, you must have an annual income of at least £75,000, or a minimum of £100,000 in savings or investments. The next best rate available to new customers is 4.06%, offered by Halifax (17 September).
Before choosing a tracker, borrowers need to be comfortable with the possibility that their rate could increase. David Hollingworth, a mortgage expert from L&C, advises: 'Trackers are therefore better suited to those with some flex in their disposable income. Trackers are more widely available without any early repayment charges, though, so they do at least allow an exit route if rates take another turn and climb steeply.'
The table shows the best tracker rates for those remortgaging that are available widely:
| 60% | Halifax | 72% | 4.06% | £1,499 | 7.24% |
| 60% fee free | Principality Building Society | 80% | 4.45% | £0 | 6.25% |
| 70% | Yorkshire Building Society | 74% | 4.18% | £995 | 5.99% |
| 70% fee free | Principality Building Society | 80% | 4.5% | £0 | 6.25% |
| 80% | Halifax | 72% | 4.23% | £1,499 | 7.24% |
| 80% fee free | Principality Building Society | 80% | 4.55% | £0 | 6.25% |
- Find out more: best mortgage rates 2026.
What will happen to the base rate in 2026?
Experts had generally forecasted a level base rate for 2026. For example, Barclays Research and Lloyds Bank both expected no further increases to the base rate this year.
However, as tensions have flared up in the Middle East and impacted the global supply of oil, some experts are now forecasting a base rate increase for 2026. For example, Goldman Sachs predicts that the base rate will rise to 4% in November.
What does this mean for savers?
One upside of the continued market turmoil is that returns from fixed-rate savings accounts are increasing. The average one-year fixed-rate account now offers a rate of 4.38%. This is up from 3.85% in January.
If you have a variable-rate savings account, today’s decision means your rate will remain unchanged.
Currently, 76% of savings accounts offer a rate higher than inflation. However, only 52% of variable rate accounts offer a rate above 3.1%.
Here are the top accounts available right now.
| Instant access | Cahoot | 5% (a) | n/a | £1 | Internet | Monthly, yearly |
| One-year fixed rate | Investec Save | 5% | n/a | £5,000 | Internet | On maturity |
| Two-year fixed rate | West Brom Building Society | 5.05% | n/a | £1 | Branch, internet | Monthly, yearly |
| Three-year fixed rate | West Brom Building Society | 5.15% | n/a | £1 | Branch, internet | Monthly, yearly |
| Four-year fixed rate | Thisbank | 5.04% | n/a | £100 | Internet, mobile app | Yearly |
| Five-year fixed rate | Shawbrook Bank | 5.25% | 65% | £1,000 | Internet | Monthly, yearly |
Table notes: Rates sourced from Moneyfacts on 17 September 2026. Provider customer score is based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score. (a) 5% AER on balances up to £3,000.
- Find out more: best savings rates 2026.
When is the next base rate decision?
The next MPC meeting is scheduled for Thursday 5 November.
The MPC will then have one further meeting this year in December.
This story is regularly updated after the latest base rate decision, with rate analysis and expert views. The last update was on 17 September 2026.
