Mortgage Rates Are Climbing Again — Here's How to Protect Yourself Now

If you've been putting off locking in a mortgage rate because you're waiting for something better to come along, this is the week to stop waiting.

What's Happening This Week

Five-year swap rates — the wholesale cost lenders use to price their fixed-rate mortgages — climbed above 4.5% this week, the highest level since October 2023. That's not the Bank of England base rate, which has sat at 3.75% since June and stays there until the Monetary Policy Committee's next decision on 17 September. It's the bond market that's moved, driven by a broader sell-off in UK government debt that's pushed gilt yields sharply higher.

The practical effect is the same either way: several lenders are expected to reprice their fixed-rate ranges upwards in the coming days and weeks. Average two-year fixed rates are already sitting around 5.6%, with five-year fixes close behind at 5.65%, though the best-buy deals at lower loan-to-value bands remain considerably cheaper — HSBC's best two-year fix for remortgaging is currently 4.52%, and Danske Bank has a 4.32% deal for buyers.

Why the Base Rate Isn't the Whole Story

I get asked a lot why fixed rates move even when the base rate hasn't. The base rate mostly drives tracker and variable deals directly. Fixed rates are priced off swap rates — essentially what it costs a lender to borrow money for two, five or ten years on the wholesale market, locked in today. When investors expect rates to stay higher for longer, or demand more return for holding UK government debt, swap rates rise, and fixed mortgage pricing follows within days, sometimes hours.

This week's move has an inflation story behind it too. UK inflation rose to 2.9% in the year to July, up from 2.6% the month before, and well above the Bank's 2% target. That makes it harder for the MPC to justify a rate cut on 17 September, and some of the swap rate move reflects markets pricing out cuts that were expected only a few weeks ago.

What It Means If You're Buying or Remortgaging

If your current fixed deal is ending in the next six months, or you're partway through a purchase, this is worth acting on now rather than waiting to see what happens. Mortgage approvals already fell to 56,053 in July — the lowest since January 2024 — and a chunk of that hesitation was buyers waiting for rates to fall further. That gap could close in the wrong direction if lenders reprice upwards before you've secured a deal.

Here's what I'd do in your position:

1. Get a mortgage offer in place now, even if completion is months away. Most lenders let you apply up to six months before you need the funds, and many hold that rate for the full offer period.
2. Use rate-switch guarantees where they're offered. A growing number of lenders will let you switch to a cheaper rate if one becomes available before completion, at no extra cost — so locking in early rarely leaves you worse off.
3. Don't assume a five-year fix is automatically the safe choice. With inflation running hot, a two-year fix gives you a chance to remortgage into better pricing if the picture calms down, though you'll want to weigh that against the security a longer fix gives you.
4. Get your paperwork ready in parallel — payslips, bank statements, ID — so any delay is on the lender's side, not yours, if pricing does move while you're mid-application.

The One Bit of Good News: Softening House Prices

If you're a first-time buyer, the pricing side of the equation isn't all bad news. Rightmove's data shows asking prices for newly listed homes fell 1.0% in July, the largest July drop in a decade, and around a third of homes currently on the market have had their asking price cut by an average of 7%. Supply is close to a 12-year high for this time of year, which means more room to negotiate even if the mortgage itself costs more than it did in the spring.

My Advice

Don't try to time this market. Nobody — including me — can tell you with certainty whether rates will be higher or lower by Christmas. What I can tell you is that a mortgage offer costs you nothing to obtain and, with the right lender, nothing to walk away from if something better appears. Get one in place, use a rate-switch guarantee if it's available, and let the softer asking prices do some of the negotiating for you on the property side.

If you'd like me to check what's realistically available to you before rates move again, get in touch — I'd rather have that conversation with you this week than after your next fixed deal has already priced up.

Kindest regards

Ian

Ian A Moore CeMAP — Director, IM Mortgage Consultancy Limited

Your home may be repossessed if you do not keep up repayments on your mortgage. IM Mortgage Consultancy Limited is authorised and regulated by the Financial Conduct Authority. This article is for general information only and does not constitute mortgage advice; rates and figures quoted were accurate at the time of writing and are subject to change.