Bank of England Holds Base Rate at 3.75%: What It Means for Your Mortgage

The Bank of England held the Bank Rate at 3.75% on Thursday 17 September. That is the sixth hold of 2026, and the rate has now sat at 3.75% since December last year.

At Drummonds Finance Group, we have spent this week fielding calls from clients whose fixed rates end over the winter, and the question is always the same one: do I move now or wait and see? This is what the decision actually changes, and what it does not.

The headline is dull. What sits underneath it is not.

The Monetary Policy Committee split 6 to 3, with Megan Greene, Catherine Mann and Huw Pill all voting to raise Bank Rate to 4%. That is the same split as July, and it is the third meeting running where the hawks have held three seats or more. Alongside the decision, the Bank warned that if energy price volatility persists, it is increasingly likely rates will need to go up rather than down.

For anyone with a mortgage deal ending in the next six months, that warning matters far more than the hold itself.

Why the Bank is talking about raising rates

Inflation rose to 3.1% in the year to August, up from 2.9% in July, driven largely by petrol and diesel prices. That is well above the Bank's 2% target and moving in the wrong direction.

The cause is the conflict in the Middle East, which began in February and has kept crude and refined energy prices both higher and more volatile than they were beforehand. The Bank's own projections now show inflation rising further over the coming quarters, and in a worst-case scenario reaching as high as 4.5% by the second quarter of next year.

This is a complete reversal of where we were at the start of the year. In January, the expectation was steady cuts through 2026 following the six reductions the Bank made between August 2024 and December 2025, which took Bank Rate down from 5.25%. Markets are now pricing the next move as a rise.

Your mortgage rate has probably already moved

Here is the part most coverage gets wrong. Fixed mortgage rates are not set by Bank Rate. They are priced off swap rates, which reflect what the market expects Bank Rate to do over the next two or five years.

That is why September has seen widespread fixed-rate increases, with several major lenders repricing twice in a matter of weeks, despite Bank Rate not moving at all. Average fixed rates had drifted down to around 5.52% in mid-July. They have been climbing since.

So the practical answer to the question of what the hold means for your mortgage is often that it means nothing, because the repricing already happened.

If you are on a fixed rate

Around 85% of borrowers are, and your payments do not change. Nothing that happened on Thursday affects you directly until your deal ends.

What it affects is what you will be offered when it does. UK Finance expects roughly 1.8 million fixed deals to expire during 2026, and a large number of those borrowers fixed when pricing looked very different.

If your deal ends within six months, act now. Most lenders will let you secure a rate three to six months ahead of your end date, and you can usually switch to something better if pricing improves before completion. You get protection against further rises with no real downside. Our remortgage guide covers the timings, and if staying put makes more sense, a product transfer with your existing lender is often quicker and involves less paperwork.

Which of the two works out better depends on your loan size, your equity and your circumstances. It is worth comparing both rather than accepting the first offer your lender emails you.

What that actually costs

The numbers are worth seeing rather than describing.

Take someone who borrowed £200,000 over 25 years in autumn 2021 and fixed for five years at 2.1%, which was around the going rate at the time. Their monthly payment has been roughly £858, and after five years of repayments the balance has come down to about £167,900 with 20 years left to run.

Remortgaging that balance at 4.6%, which is broadly where competitive deals sit at the moment for someone with decent equity, gives a payment of about £1,070 a month. At 5.6%, closer to the market-wide average across all loan-to-value bands, it is about £1,165.

So the jump is somewhere between £210 and £310 a month, depending on how good a deal you end up with and how much equity you have. Over a two-year fix, the gap between those two outcomes is more than £2,200.

Doing nothing is worse again. If the deal lapses onto a standard variable rate at 7.13%, which is roughly the current average, the payment on that same balance is about £1,315. That is £245 a month more than the 4.6% deal, or close to £2,950 over a year, for no reason other than not having got round to it.

These are illustrative figures on a repayment basis and your own numbers will differ. The shape of it will not.

If you are on a tracker or your lender's SVR

Trackers follow Bank Rate directly, so a hold means your payments stay where they are. Given the direction of travel, that is worth something.

If you have slipped onto your lender's standard variable rate after a deal ended, the picture is different. Average SVRs are now above 7%, which is considerably more than you would pay on almost any fixed deal currently available. If that is you, this is the single most expensive month to do nothing.

Two years or five?

This is the live question at the moment, and the honest answer is that it depends on what you think happens next and how much certainty you want to pay for.

Ordinarily, a five-year fix costs more than a two-year, because you are paying for a longer guarantee. Right now the two sit close together, with average pricing separated by a few basis points rather than half a per cent. That is unusual, and it reflects a market that is no longer confident rates are heading down.

A five-year fix makes sense if your priority is knowing your payment until 2031 and you would rather not think about it again. If markets are right that Bank Rate rises from here, you will have locked in below where pricing goes.

A two-year fix keeps you flexible. If the energy shock fades and inflation comes back towards target, rates could look very different in 2028, and you would be free to move. The risk is obvious: you might be remortgaging into something worse.

There is no universally correct answer, and anyone who tells you otherwise is guessing. What we can do is model both against your actual balance and term so you are choosing between two real numbers rather than two opinions.

Buying rather than remortgaging

Higher rates squeeze affordability, and affordability is usually what decides how much you can borrow rather than deposit alone.

That makes lender choice more important than it has been in years. Standard affordability calculations tend to cap borrowing at four to four and a half times income, but a smaller group of lenders will consider five or six times salary for applicants who meet their criteria. On a £45,000 income, that difference is worth well over £60,000 of borrowing capacity.

The same applies to how your income is assessed. If you are self-employed, work shifts, take regular overtime, or have income that is not a flat monthly salary, two lenders can arrive at very different figures from the same paperwork. That is true for NHS staff with bank and enhancement income, for contractors, and for anyone on a visa where residency history affects the lender panel, which we cover on our foreign national mortgages page.

If you are moving home, the question of whether to port your existing rate or start again is worth proper thought in a rising market. Porting can preserve a rate you would not get today.

Landlords

Buy-to-let affordability is assessed on rental income against a stress rate, and stress rates move with expectations rather than with Bank Rate itself. Several lenders have already tightened.

If you have a buy-to-let deal ending this year, particularly a higher loan-to-value one, get the numbers checked early. Rental stress tests are where deals fail, and there is usually more room to manoeuvre if you find out in September rather than in December.

What happens next

The next decision is on 5 November, and it is a more significant one than usual for two reasons.

First, it comes with a full Monetary Policy Report, which means updated forecasts for inflation and growth rather than just a vote and a summary. Those forecasts move swap rates, and swap rates move mortgage pricing.

Second, it lands eight days after the Autumn Budget on 28 October. The Committee will have seen how gilt markets responded to whatever the Chancellor announces, and fiscal decisions on tax and borrowing feed into the inflation outlook the Bank is trying to manage. A Budget that markets read as inflationary makes a November rise more likely, not less.

A rise at that meeting is now widely anticipated, though nothing is settled and the Committee has surprised before. The final decision of 2026 comes on 17 December.

None of which should drive your decision. If your deal ends in the next six months, the case for securing a rate now holds whether the Bank moves in November or not, because you can still move to something cheaper if pricing improves. Waiting to see what happens is a bet, and it is a bet where the downside is larger than the upside.

Frequently asked questions

Does the base rate hold mean my mortgage payment stays the same?

If you are on a tracker, yes, because trackers follow Bank Rate directly. If you are on a fixed rate, your payment was never going to change until the deal ends. If you are on a standard variable rate, your lender sets that themselves and can move it whether or not the Bank does.

Will mortgage rates come down for the rest of 2026?

Markets are currently pricing the next move in Bank Rate as a rise rather than a cut, and lenders have been increasing fixed rates through September in response to higher swap rates. Individual lenders still cut selected products to win business, so better deals appear even in a rising market, but the broad direction has changed since the spring.

How early can I secure a new rate before my deal ends?

Most lenders allow between three and six months, and a few go further. Securing early is close to risk-free, because if pricing improves before completion, you can usually switch to the better deal.

Is a product transfer better than remortgaging to a new lender?

Sometimes. A product transfer is quicker, involves less paperwork and avoids a fresh affordability assessment, which matters if your circumstances have changed. A remortgage opens up the whole market and often produces a better rate. The only way to know is to compare the two against your actual balance.

What happens if I do nothing when my fixed rate ends?

You move onto your lender's standard variable rate, which currently averages above 7%. On a £167,900 balance, that is roughly £245 a month more than a competitive fixed deal. It is the most expensive outcome available and the easiest one to avoid.

Talking it through

We are a whole-of-market mortgage broker based in Oxfordshire, working with clients across the UK. Most of our work is with people whose situation does not fit a high street affordability calculator, whether that is complex income, adverse credit, visa status or an unusual property.

If your deal ends in the next six months, or you have been told no by a bank and want a second opinion, get in touch. It costs nothing to find out where you stand, and at the moment the cost of finding out late is going up.