UK Mortgage Rates Edge Up Again: October 2025 Update

UK Mortgage Rates Edge Up Again: October 2025 Update

After eight months of steady declines, UK mortgage rates are creeping up once more — leaving homeowners and first-time buyers asking what this means for them.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

According to the latest Moneyfacts data, the average two-year fixed mortgage rate has climbed to 4.98%, while five-year fixes now sit just above 5%. Major lenders such as Santander, HSBC, Barclays, and Nationwide have already adjusted their pricing upwards.

So, what’s driving this latest increase — and how can you prepare? Mortgage One explains what’s behind the trend and what steps borrowers should take now.

Why Mortgage Rates Are Rising Again

Market Expectations Are Changing
Mortgage lenders set fixed-rate pricing using swap rates — these reflect what the market expects future interest rates to be. Recently, UK swap rates have risen as investors brace for longer periods of elevated inflation and uncertainty. Traders now expect the Bank of England to delay its first base rate cut until spring 2026, later than previously forecast.

Inflation Is Still Stubborn
Although headline inflation has dropped to 2.6%, core inflation remains sticky. This has made the Bank of England cautious about cutting rates too soon. That caution translates directly into higher mortgage pricing, as lenders anticipate sustained funding costs.

Global Bond Market Pressure
Rising UK gilt yields — alongside movement in US Treasury yields — have added further cost pressures for lenders. As borrowing costs increase, these are passed on to customers through higher mortgage rates.

How Major Lenders Are Reacting

Leading lenders have already started repricing their products:

• Santander: Increased selected two- and five-year fixed rates by up to 0.25%.

• HSBC: Temporarily withdrew sub-5% products to reprice.

• Nationwide: Introduced small increases, especially on higher loan-to-value products.

• Barclays: Launched new fixed deals with greater flexibility but higher starting rates.

Some specialist lenders have paused applications altogether to reassess pricing. As a result, many borrowers are now rushing to secure existing offers before they disappear — creating a surge in broker activity.

What This Means For Buyers And Homeowners

First-Time Buyers
The rise in fixed rates could squeeze affordability, particularly for those using 5% deposit products. Some lenders have tightened income multiples, making it harder to borrow larger amounts. However, shared ownership and equity loan options remain viable routes onto the property ladder.

Existing Homeowners
If your current fixed deal ends within the next six to nine months, you could face a monthly payment rise of £200–£400 on average. Remortgaging early — typically up to six months before expiry — can help you lock in a deal before further increases.

Buy-To-Let Landlords
Rising financing costs are pressuring rental yields. Many investors are turning to five-year fixed deals to maintain stability while markets remain unpredictable.

Should You Lock In Now Or Wait?

Locking In Now
Volatility could drive rates even higher in the short term. Securing a rate-lock today can provide peace of mind and shield you from future rises. Some lenders offer “switch-and-fix later” options, allowing you to move to a lower rate if one becomes available before completion.

Waiting For Possible Cuts
If you’re not due to remortgage for another 12–18 months, waiting could pay off. Analysts expect the Bank of England base rate to fall toward 3% by mid-2026, which may lead to lower fixed rates over time.

Mortgage One’s Expert Guidance

Mortgage One advises a balanced approach: lock in early if your deal is ending soon, but choose a product that offers flexibility should rates fall sooner than expected. Every borrower’s financial situation is unique, making professional guidance essential right now.

Example: How Rate Rises Impact Monthly Costs

Even small increases can have a big impact:

• A £200,000 mortgage over 25 years rising from 4.50% to 5.00% increases payments by around £57 per month.

• A £300,000 loan under the same conditions rises by roughly £85 monthly.

• A £400,000 mortgage jumps by around £114 per month.

This demonstrates how timing your mortgage deal can make a significant financial difference.

How Mortgage One Can Help You

Mortgage One monitors daily rate changes from over 100 UK lenders, giving you access to exclusive, broker-only products. Our expert advisers can:

• Compare hundreds of remortgage options instantly.

• Identify rate-lock or switch-down deals with no fees.

• Recommend whether to fix, track, or wait — based on your financial position.

• Provide a free mortgage review to ensure you’re on a competitive rate.

Contact Mortgage One today for tailored advice before rates move higher again.

Conclusion

Mortgage rates are edging upwards once more in October 2025, signalling a shift in the market after months of calm. Inflation, global pressures, and delayed rate-cut expectations are keeping borrowing costs elevated. Acting early could protect you from further increases.

Whether you’re buying, remortgaging, or investing, Mortgage One can guide you through the changing market — helping you make confident, informed decisions.