For much of the past couple of years, the dominant conversation around UK mortgage rates has been about when cuts would arrive. That narrative has shifted noticeably in recent months, with brokers and economists increasingly bracing for rates to rise rather than fall. Here’s what’s changed, and what it could mean for anyone with a mortgage or planning to take one out.
A Shift From “Cuts Are Coming” to “Hikes Are Possible”
A recent industry poll of mortgage brokers found the majority now expect one or two Bank of England base rate rises before the end of the year, a marked change from the widespread expectation of further cuts that dominated broker sentiment not long ago. Only a small minority of those polled still expect rates to hold steady, and fewer still anticipate a cut. It’s a genuine shift in tone, driven largely by inflation risk rather than any single dramatic event.
What’s Driving the Change
The main factor behind this shift is escalating geopolitical tension in the Middle East, which has disrupted international energy and commodity markets and pushed energy prices higher. Higher energy costs feed directly into inflation, and persistent inflation risk is exactly the kind of pressure that pushes a central bank toward holding rates higher for longer, or raising them further, rather than cutting. The Bank of England’s Monetary Policy Committee has already held its base rate at 3.75% through several consecutive meetings this year, but recent votes have shown a widening split among committee members, with a growing number pushing for a rise rather than continued stability.
Even without a base rate change, rising gilt yields, a reflection of what investors expect from UK government borrowing costs, have already tightened funding conditions for mortgage lenders, which can push fixed mortgage pricing higher independently of what the Bank of England actually decides. This is why fixed-rate pricing can move before, or even without, a formal base rate decision.
The Scale of the Impact on Existing Homeowners
The Bank of England’s most recent Financial Stability Report estimates that a little over 5 million UK households are projected to see their mortgage repayments increase by the end of 2028, an upward revision from the roughly 4 million households forecast in an earlier report. That upward revision reflects exactly the geopolitical and energy-driven pressure described above. For households currently on a low fixed rate secured a few years ago, remortgaging onto a new deal at today’s rates is likely to mean a noticeably higher monthly payment, regardless of whether the base rate itself moves further from here.
What This Means for Borrowers
For anyone with a fixed-rate deal ending in the next several months, the practical takeaway is that waiting for rates to fall before locking in a new deal is now a considerably riskier strategy than it looked a year ago. Many lenders allow borrowers to secure a new rate several months ahead of their current deal expiring, with the option to switch to a better rate if one becomes available before completion, a useful way to protect against further rises without losing the ability to benefit if rates do ease instead.
For prospective buyers, higher rates reduce affordability in the way they always do: lenders’ affordability stress tests become tighter as rates rise, which can shrink the amount available to borrow even for buyers whose income hasn’t changed. Getting a Mortgage Agreement in Principle sooner rather than later, and speaking to a broker about current fixed-rate options, is generally more useful in a rising-rate environment than in a falling one, since acting later could mean securing a materially worse rate than what’s available today.
The Bottom Line
The direction of travel on mortgage rates has genuinely shifted, and both current and prospective borrowers should treat “rates might rise from here” as a real possibility rather than a remote one. With the Bank of England’s next decision still to come and the committee visibly divided, this is a market where getting ahead of a remortgage or purchase decision is likely to matter more than it has in some time.