Mortgage & Housing Market Update
Mortgage Rates, Interest Rates, Inflation, GDP and House Prices
Keep up to date with the key economic figures affecting UK mortgage rates and the housing market.
We regularly update this page using information from key market sources to provide a straightforward overview of mortgage rates, Bank Rate, inflation, economic growth and UK house prices.
Mortgage Rate Forecast
Fixed mortgage rates have risen during September as lenders responded to higher swap rates and changing expectations for future Bank of England interest rates.
In the short term, mortgage rates are likely to remain under upward pressure while inflation concerns and financial-market interest-rate expectations remain elevated. The Bank of England has warned that monetary policy may need to tighten if higher energy prices lead to more persistent inflation, while financial markets are currently anticipating further increases in Bank Rate.
This means fixed mortgage rates could remain around current levels or move higher if swap rates continue to rise. However, mortgage rates could begin to fall again if energy prices ease, inflation improves or markets reduce their expectations for future Bank Rate increases.
The outlook remains uncertain, and fixed mortgage rates can change before the Bank of England makes any change to Bank Rate. For borrowers approaching the end of a mortgage deal, it can therefore be sensible to review the available options in advance rather than trying to predict the lowest point in the market.
UK Market at a Glance
| Measure | Latest | Previous |
|---|---|---|
| Bank of England Bank Rate | 3.75% | 3.75% |
| CPI inflation | 3.1% | 2.9% |
| UK GDP growth – quarterly | +0.5% | +0.6% |
| Lloyds average house price | £298,468 | £299,153 |
| Nationwide average house price | £274,251 | £275,465 |
Bank of England Base Rate
The Bank of England Bank Rate is the UK’s main interest rate and is set by the Bank’s nine-member Monetary Policy Committee (MPC).
Bank Rate influences borrowing and savings rates across the economy. Tracker mortgages generally move directly in line with Bank Rate, while lenders can also change their standard variable rates.
Fixed mortgage rates work differently because they are influenced more by financial-market expectations about where interest rates may be heading.
Current Bank Rate: 3.75%
At its meeting in September 2026, the Monetary Policy Committee voted 6–3 to keep Bank Rate unchanged at 3.75%.
Three members voted to increase Bank Rate by 0.25 percentage points to 4.00%.
The Bank highlighted the effect of higher and more volatile energy prices on the inflation outlook and said it remains prepared to adjust monetary policy where necessary to return inflation sustainably to its 2% target.
Source: Bank of England – Interest Rates and Monetary Policy
Next Update: 5 November 2026
Interest Rate Outlook
The outlook for interest rates has changed considerably during 2026.
Higher energy prices have increased the risk that inflation remains above the Bank of England’s 2% target for longer than previously expected.
Financial markets are currently pricing in the possibility of further increases in Bank Rate, while a number of economists now expect at least one additional rate rise.
However, the outlook remains uncertain. Future decisions will depend on inflation, wage growth, economic activity, the labour market and developments in energy prices.
UK Inflation
The Consumer Prices Index (CPI) measures how the prices of goods and services bought by households have changed compared with a year earlier.
The Bank of England has a 2% inflation target.
Inflation is particularly important for mortgage borrowers because persistently high inflation can lead the Bank of England to keep interest rates higher, or increase them, in an attempt to bring price growth back towards target.
Current CPI Inflation: 3.1%
UK CPI inflation was 3.1% in the 12 months to August 2026, up from 2.9% in July.
CPIH, which also includes owner-occupiers’ housing costs, increased to 3.3%.
Transport costs, particularly motor fuels, made the largest upward contribution to the change in the annual inflation rate.
Source: Office for National Statistics – Inflation and Price Indices
Next Update: 21 October 2026
Inflation Outlook
The Bank of England expects inflation to rise further in the coming months as higher energy costs feed through into household and business prices.
Based on energy prices available at its September meeting, the Bank estimated CPI inflation could reach approximately 3.75% during the final quarter of 2026 and move slightly above 4% in early 2027.
These are forecasts rather than guarantees and could change significantly if energy prices, economic conditions or geopolitical developments change.
UK Economic Growth – GDP
Gross domestic product (GDP) measures the value of goods and services produced in the UK and is one of the main measures used to assess the health of the economy.
Economic growth can affect employment, wages, consumer confidence, housing demand and interest-rate decisions.
Latest Quarterly GDP Growth: +0.5%
The UK economy grew by 0.5% between April and June 2026, according to the latest ONS estimate.
This was revised upwards from the initial estimate of 0.4%.
GDP grew by 0.6% between January and March 2026.
Compared with the same period a year earlier, UK GDP was approximately 1.4% higher.
Services made the largest contribution to economic growth during the second quarter.
Source: Office for National Statistics – Gross Domestic Product
Next Update: 12 November 2026
Economic Outlook
UK economic growth has remained positive, although the outlook continues to be affected by higher borrowing costs, energy prices and wider global economic conditions.
The strength of the economy is also important for interest rates. Stronger-than-expected growth can reduce the need for interest-rate cuts, particularly when inflation remains above target. Weaker growth can have the opposite effect.
UK House Prices
House prices are measured in several different ways, so there is no single definitive monthly figure.
Two of the most closely followed measures are the Lloyds House Price Index and the Nationwide House Price Index.
Both use mortgage data from their respective lending businesses. As a result, their average house prices and monthly movements will not always be the same.
The official UK House Price Index, published using HM Land Registry and ONS data, is based largely on completed property transactions. It provides broader market coverage but is published with a greater time lag.
For that reason, it is usually more useful to consider the longer-term trend across several indices rather than place too much emphasis on a single month’s figures.
Lloyds House Price Index
The Lloyds House Price Index was previously known as the Halifax House Price Index. It was renamed in July 2026, while retaining the same underlying methodology.
It is one of the UK’s longest-running house price measures, with data dating back to 1983.
Latest Lloyds Average UK House Price: £298,468
- fell 0.2% during August
- fell 0.1% over the latest quarter
- were 0.4% lower than a year earlier
This was the first annual fall recorded by the index since November 2023.
Source: Lloyds Bank – House Price Index
Next Update: Early October 2026
Nationwide House Price Index
Nationwide’s House Price Index is based on mortgages approved by Nationwide and is normally published shortly after the end of each month.
Latest Nationwide Average UK House Price: £274,251
- fell 0.2% during September, after seasonal adjustment
- were 0.8% higher than a year earlier
Annual house price growth slowed from 1.6% in August to 0.8% in September.
Regional performance continues to vary considerably.
During the three months to September, Nationwide reported stronger annual growth in areas including Northern Ireland, the North West, Scotland and the North, while East Anglia recorded an annual fall.
Source: Nationwide – House Price Index
Next Update: Early November 2026
House Price Outlook
The latest house price data point towards a relatively subdued UK property market.
Higher mortgage rates have placed pressure on affordability and buyer demand. However, house prices have generally risen more slowly than earnings, which can gradually improve affordability for some buyers.
The outlook will depend heavily on mortgage rates, household incomes, employment, housing supply and consumer confidence.
It is also important to remember that national averages can hide significant differences between individual regions and local property markets.
Why Don’t Fixed Mortgage Rates Follow Bank Rate Exactly?
One of the most common misconceptions about mortgages is that fixed mortgage rates should rise or fall immediately when the Bank of England changes Bank Rate.
They do not work quite like that.
Fixed mortgage rates are influenced heavily by swap rates and other financial-market funding costs.
Swap rates reflect, among other factors, what financial markets expect interest rates to average over a future period.
This means fixed mortgage rates can move before the Bank of England changes Bank Rate.
For example:
- if financial markets begin expecting higher interest rates, fixed mortgage pricing can rise even while Bank Rate remains unchanged
- if markets expect Bank Rate to fall in future, fixed mortgage rates can fall before the Bank of England actually cuts rates
Tracker mortgages are different because their interest rate normally moves directly in relation to Bank Rate.
Standard variable rates (SVRs) are set by individual lenders and can generally be changed at the lender’s discretion.
What Does the Current Market Mean for Mortgage Borrowers?
Remortgaging
If your existing mortgage deal ends within the next six months, it can be worthwhile reviewing your options in advance.
Many lenders allow a new mortgage rate to be secured several months before the existing deal ends. Depending on the lender and circumstances, there may also be an opportunity to review the available products again before completion if mortgage rates improve.
Allowing a mortgage deal to expire without arranging another product will normally result in the mortgage moving onto the lender’s standard variable rate, unless another arrangement has been made.
Buying a Property
Mortgage rates affect both monthly repayments and how much a lender may be prepared to lend.
It is therefore important to consider the mortgage payment alongside other household expenditure and to understand how your payments could change in future.
Different lenders also assess affordability in different ways, so the amount available can vary considerably between lenders.
Moving Home
People moving home need to consider both current mortgage costs and conditions in their local housing market.
National house price figures provide useful context, but local supply, demand and recent comparable sales are generally more relevant when assessing an individual property’s value.
Speak to a Mortgage Adviser
Changes in interest rates and mortgage pricing can affect borrowers in different ways depending on their circumstances.
If you are buying a property, moving home, remortgaging or approaching the end of your current mortgage deal, our advisers can review your circumstances and compare suitable mortgage options from across the market. Speak to an Adviser Today
This page is for general information only and does not constitute personal financial advice. Economic data may be revised after publication and forecasts can change. Mortgage rates and products can change at short notice and availability will depend on individual circumstances and lender criteria.
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