UK Mortgage Market Update:
BoE Holds At 4%, Swaps And Gilts Steady
2nd October 2025
UK Mortgage Market Update: BoE Holds At 4%, Swaps And Gilts Steady
UK mortgage rates remain stable today after the Bank of England voted to hold Bank Rate at 4% on 17 September. The markets that underpin fixed-rate mortgages—such as SONIA swaps and UK gilt yields—are firm but not accelerating, while new data from Nationwide shows house prices rose 0.5% in September. Lenders are making selective adjustments to products, with HSBC updating its ranges this week.
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What Moved UK Mortgage Pricing Today
The Bank of England held Bank Rate at 4.00% in its September meeting, with seven members voting to hold and two calling for a cut. Markets continue to price in future rate reductions, but not imminently.
SONIA swap rates - used by lenders to set fixed mortgage deals - stood around 3.98% for two years and 4.14% for five years today. Meanwhile, the 10-year gilt yield sat at about 4.70% late morning in London, influencing longer-term funding costs.
Nationwide reported that average UK house prices rose to £271,995 in September, up 0.5% month-on-month and 2.2% year-on-year. On the lending side, HSBC made adjustments to its mortgage range from 30 September, continuing the trend of incremental shifts rather than sweeping changes.
Bank Of England And What It Means For Rates
The Bank of England’s Monetary Policy Committee voted to maintain Bank Rate at 4%. Two members favoured a 0.25% cut, signalling that while inflation remains uneven, conditions are more balanced than earlier in the year.
For borrowers, a steady Bank Rate means tracker mortgages and standard variable rates are unchanged for now. Fixed-rate pricing, however, is influenced more by swap rates, which remain stable.
SONIA, the Sterling Overnight Index Average, reflects the interest banks pay to borrow sterling overnight. Lenders monitor the future path of SONIA through swaps when setting fixed-rate deals. With two- and five-year swaps hovering around 4%, fixed rates are currently steady.
Housing Market Pulse
Nationwide’s index shows house prices are holding firm, with annual growth of 2.2% and the average property now at £271,995. Northern Ireland leads the regions in growth, while the outer South East is lagging.
Mortgage approvals are broadly in line with pre-pandemic levels, pointing to a stabilising housing market. On the funding side, the 10-year gilt yield at 4.70% remains elevated compared with pre-2022 norms, but below previous highs. If gilts and swaps soften further into autumn, lenders could gradually reduce fixed mortgage pricing, though moves are likely to be cautious.
Lender Moves And Practical Takeaways
Lenders continue to adjust their offerings at the margins. HSBC implemented changes across residential and buy-to-let mortgages on 30 September, while other high-street banks have made targeted tweaks in recent weeks.
Borrowers should look beyond headline rates to consider fees, incentives and product criteria. Small changes in these areas can make a big difference to overall cost.
What This Could Mean For You
For first-time buyers, stable swap rates could help with budgeting. It’s important to weigh both the interest rate and any associated fees to get a full picture of affordability. Mortgage One offers tailored guidance on planning your deposit and assessing affordability.
For remortgagers, those with deals ending in the next 6–9 months may benefit from reserving a product now. Many offers last six months, allowing flexibility to switch to a better rate before completion if markets move in your favour. Mortgage One can help you compare options and secure the right deal.
For buy-to-let landlords, affordability remains tied to stress tests and rental coverage ratios. While more products are coming to market, terms can vary by property type and lender. Mortgage One advisers can explain the latest lending criteria and help you plan your portfolio financing.
To understand how today’s market developments could affect you, speak with Mortgage One Finance for expert advice tailored to your circumstances.
Key Numbers (As At 2 October 2025, 12:00 London)
Bank of England Bank Rate: 4.00% (held 17 Sep 2025)
SONIA Swaps: 2-yr ~3.98%, 5-yr ~4.14%
UK 10-yr Gilt Yield: ~4.70%
Nationwide House Price Index: +0.5% m/m, +2.2% y/y, £271,995 avg
HSBC Mortgage Products: Adjustments effective 30 Sep 2025
Rates and criteria can change quickly and remain subject to eligibility and affordability checks.
FAQs
Will Mortgage Rates Fall This Autumn?
They may ease if swaps and gilt yields drift lower, but there is no guarantee. Lenders typically adjust in small steps and can reverse changes quickly.
What Drives Fixed-Rate Mortgages Day To Day?
Primarily SONIA swap rates, alongside lenders’ funding costs, capital requirements and competitive pressures.
Is Now A Good Time To Secure A Remortgage?
If your deal ends in the next 6–9 months, consider securing a product now. Many lenders allow a switch to a better rate before completion.
How Are House Prices Trending?
Nationwide data shows house prices rising 0.5% in September and 2.2% year-on-year, indicating stabilisation.
Do Tracker Rates Change When Bank Rate Is Held?
Most trackers follow Bank Rate directly, so they only move when the Bank of England changes the rate. Standard variable rates are set at lenders’ discretion.
This article is for information only and is not personal advice. Mortgage One is a qualified mortgage adviser.
Product availability, rates and criteria can change at short notice and are subject to eligibility and affordability assessments.
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