The UK mortgage market has entered September with a more uncertain outlook, as rising swap rates have prompted several lenders to increase selected fixed mortgage rates.
Despite hopes earlier in the year that mortgage rates could continue to improve, movements in wholesale funding markets have put renewed pressure on fixed-rate pricing.
At the same time, the latest house price figures released today show UK property prices falling annually for the first time since November 2023, while mortgage approvals remain at their lowest level since January 2024.
There are still competitive mortgage deals available, and some lenders have moved in the opposite direction by cutting selected rates. However, borrowers hoping that August’s Bank Rate reduction would immediately lead to cheaper fixed mortgages are seeing a more complicated picture.
Quick Answer: What’s Happening With UK Mortgages This Week?
Mortgage rates have started to edge upwards again at the beginning of September 2026. Moneyfacts reports that the average two-year fixed mortgage rate increased from 4.96% on 26 August to 4.98%, while the average five-year fixed rate rose from 4.99% to 5.01%. Several lenders, including NatWest and Santander, increased selected fixed rates during the week as swap rates moved higher.
Meanwhile, new house price data released on 7th of September showed prices falling 0.4% annually in August, the first annual decline since November 2023.
For borrowers, the key message is that movements in Bank Rate and fixed mortgage rates do not always happen at the same time or in the same direction.
Why Are Mortgage Rates Rising Again?
This is perhaps the most important mortgage story of the week.
Bank Rate currently stands at 3.75%, but fixed mortgage pricing is influenced by much more than the Bank of England’s headline rate.
Swap rates, which reflect financial market expectations and are an important influence on the pricing of fixed mortgages, have moved upwards in recent weeks.
Swap rates, which are an important factor in how lenders price fixed-rate mortgages, have subsequently moved upwards.
Moneyfacts reported that two-year swap rates had increased from 3.655% to 3.752%, while five-year swaps had risen from 3.707% to 3.827%.
This has already started feeding through to mortgage pricing.
Moneyfacts reported selected increases during the week including:
- NatWest and Royal Bank of Scotland – up to 0.20 percentage points
- Santander – up to 0.11 percentage points
- Gen H – up to 0.15 percentage points
- Vernon Building Society – up to 0.15 percentage points
- Hodge – up to 0.20 percentage points.
It demonstrates an important point for anyone following mortgage rates: Bank Rate and fixed mortgage rates do not always move in the same direction at the same time.
Expectations around inflation, future Bank Rate decisions, financial markets, lender funding costs and competition can all influence the price of a fixed mortgage.
What Are Average UK Mortgage Rates in September 2026?
According to the latest Moneyfacts figures, the average mortgage rate has edged from 5.00% to 5.01%.
The average two-year fixed rate has moved from 4.96% on 26 August to 4.98%, while the average five-year fixed mortgage has risen from 4.99% to 5.01%.
| Mortgage rate | 26th August 2026 | Latest figure |
|---|---|---|
| Average 2-year fixed rate | 4.96% | 4.98% |
| Average 5-year fixed rate | 4.99% | 5.01% |
| Overall average mortgage rate | 5.00% | 5.01% |
Source: Moneyfacts, September 2026.
The movements themselves are relatively small, but the direction is important.
Borrowers had become accustomed to seeing mortgage rates gradually improve. The recent increase in swap rates means that further reductions are no longer guaranteed in the short term.
First Direct Cuts Mortgage Rates Despite Wider Increases
Not every lender increased its rates this week.
First Direct reduced rates across much of its fixed mortgage range by as much as 0.19 percentage points, with the changes taking effect from 2 September.
Its largest reduction was made to a 95% LTV two-year fixed mortgage aimed at first-time buyers, which fell to 5.29%.
First Direct also reduced selected first-time buyer, home mover and remortgage rates, with its first-time buyer and home mover two-year fixed products starting from 4.52% following the changes.
There is an important distinction for borrowers using a mortgage broker: First Direct mortgages are sold directly to customers rather than through mortgage intermediaries.
Nevertheless, the reductions demonstrate that individual lenders can move against the wider market depending on their appetite for new mortgage business.
This is why looking at the mortgage market as a whole doesn’t necessarily tell you what is happening with every lender.
House Prices Fall Annually for the First Time Since 2023
Fresh housing market data released on the 7th of September provides another indication of the uncertainty facing buyers and sellers.
Lloyds’ latest house price data showed that UK property prices fell 0.2% month on month in August and were 0.4% lower than a year earlier.
It represents the first annual fall recorded by the index since November 2023.
The figures were weaker than economists had expected, with a Reuters poll having forecast annual growth of 0.2%.
Lloyds Mortgages Director Andrew Asaam pointed towards global events, inflation and higher borrowing costs as factors contributing to greater economic uncertainty, with some buyers choosing to wait and some sellers reluctant to accept lower offers.
Why Did Nationwide and Lloyds Report Different House Price Figures?
This is worth addressing because anyone following mortgage news this week could reasonably be confused.
Nationwide reported last week that house prices increased 1.6% annually in August, with a 0.2% monthly increase.
Lloyds has now reported an annual 0.4% fall and a 0.2% monthly decline for the same month.
Neither figure necessarily means the other is “wrong”.
House price indices use different datasets and methodologies, so they can produce different results, particularly when the market is subdued.
Taken together, the figures suggest that the housing market remains relatively flat and cautious rather than experiencing either a strong boom or a dramatic fall.
That distinction is important for buyers who may otherwise interpret a single house-price headline as evidence that the entire market has suddenly changed.
Mortgage Approvals Remain Subdued
The latest Bank of England figures also provide context for the quieter housing market.
Mortgage approvals for house purchases fell to approximately 56,100 in July, their lowest level since January 2024, down from 58,200 in June and below the previous six-month average of around 60,800.
At the same time, approvals for remortgaging with a different lender increased slightly from 34,100 to 34,500.
Net mortgage borrowing also fell substantially, from £7.7 billion in June to £4.3 billion in July.
Interestingly, the effective interest rate actually paid on newly drawn mortgages increased from 4.35% to 4.45% during July.
Together, these figures suggest that borrowers are still active, but the market has lost some momentum.
What Does This Mean for First-Time Buyers?
The picture for first-time buyers is mixed.
Rising fixed mortgage rates are unlikely to be welcomed by buyers already dealing with affordability pressures. However, a quieter property market could potentially give some buyers greater negotiating power, particularly where properties have been listed for some time.
There are also still lenders actively competing for borrowers with smaller deposits.
First Direct’s decision to reduce its 95% LTV two-year fix to 5.29% this week is one example of competition remaining in the higher-LTV market.
For a first-time buyer, therefore, the important figures aren’t simply the national average mortgage rate or average house price.
Deposit size, income, existing commitments, credit profile and the lender’s affordability model will determine what mortgage options are actually available.
What Does This Mean for People Remortgaging?
Homeowners approaching the end of a fixed mortgage deal face a slightly different decision.
The latest Bank of England data showed remortgage approvals rising slightly in July. The latest Bank of England data showed remortgage approvals with a different lender rising slightly from 34,100 in June to 34,500 in July.
For borrowers coming to the end of an existing deal, this makes reviewing the available options early particularly important.
If rates fall before completion, it may sometimes be possible to review whether a better product is available. But delaying the process purely in the hope that mortgage rates will fall can also carry a risk if lenders instead reprice upwards.
Oportfolio Insight
One of the biggest misconceptions around mortgage pricing is that fixed mortgage rates simply follow Bank Rate.
In reality, lenders price fixed mortgages using a much wider range of factors, and movements in swap rates show how quickly the outlook can change.
For our clients, we’re less interested in trying to predict the exact bottom of the market and more interested in establishing what is available for their circumstances now. A competitive headline rate isn’t particularly useful if the lender’s affordability calculation, income criteria or property requirements don’t work for the borrower.
Are Mortgage Rates Expected to Fall in 2026?
The outlook for UK mortgage rates remains uncertain.
Recent increases in swap rates have put renewed pressure on fixed mortgage pricing, and several lenders have already increased selected rates.
This doesn’t necessarily mean mortgage rates will continue rising throughout the remainder of 2026. Lender competition, inflation, financial market expectations and future Bank of England decisions could all influence pricing.
However, nobody can know with certainty where mortgage rates will be in several months’ time.
For somebody ready to buy a property or approaching the end of an existing mortgage deal, it can therefore be more useful to understand the options available now and how they fit their circumstances rather than basing a decision entirely on predictions about future rates.
What Should Mortgage Borrowers Watch Next?
The biggest issue to watch over the coming weeks is whether the recent increase in swap rates results in more lenders repricing their fixed mortgage ranges.
Inflation expectations and developments affecting energy prices will also remain important because of their potential influence on future Bank Rate expectations.
For borrowers, lender-specific changes matter too. As First Direct demonstrated this week, one lender can reduce rates while others are increasing them.
This means the mortgage market can contain opportunities even when the overall direction of rates looks less favourable.
The Bank of England’s next interest rate decision is also due on 17th of September 2026, making this one of the key dates for borrowers to watch.
Key Takeaways
- Average two-year fixed mortgage rates have increased to 4.98%, according to Moneyfacts.
- Average five-year fixed rates have risen to 5.01%.
- Rising swap rates have prompted lenders including NatWest and Santander to increase selected mortgage rates.
- First Direct moved in the opposite direction, cutting selected rates by as much as 0.19 percentage points.
- Lloyds reported a 0.4% annual fall in house prices in August, the first annual decline since November 2023.
- Nationwide’s separate index reported 1.6% annual growth, illustrating how different house-price indices can produce different results.
- Mortgage approvals for house purchases fell to around 56,100 in July.
- Fixed mortgage rates do not simply follow Bank Rate, with swap rates, funding costs and lender competition also influencing pricing.
Speak to Oportfolio About Your Mortgage
Mortgage rates can change quickly, and the lowest advertised rate isn’t necessarily the most suitable or cost-effective mortgage for every borrower.
If you’re buying a property, moving home or approaching the end of an existing mortgage deal, Oportfolio can assess your income, deposit, commitments and property requirements before comparing suitable mortgage options.
Speak to our mortgage advisers to find out what the latest market changes could mean for you.
