Lenders are repricing ahead of the Bank of England’s Monetary Policy Committee vote on Thursday, causing fixed mortgage interest rates to reach a three-year high, Moneyfactscompare.co.uk analysis revealed.
Moneyfacts data shows that the challenging environment for repricing fixed-rate mortgage deals has created a mix of activity from lenders over recent weeks.
This comes as the market expects the bank’s interest rate to rise by 0.25% tomorrow (November 5).
A Reuters poll of 63 economists showed that 54 of them expected the bank to raise interest rates by 25 basis points from 3.75% to 4%, a sharp shift from September when about 90% expected interest rates to remain unchanged for the rest of 2026.
The increase will be the first base rate increase since August 2023.
Moneyfacts suggests that major lenders may switch over the coming days if future rate expectations stabilize.
However, the lowest two-year fixed rates from Barclays, HSBC, Lloyds Bank, NatWest and Santander are still 0.44% higher on average than at the start of September.
The average interest rate on a new mortgage has reached a three-year high, rising to 5.89%, up from 5.83% at the beginning of October.
The rise was last recorded in November 2023 at 6.07%.
The average two-year fixed mortgage rate has increased 1.14% since January 2026, rising from 4.83% to 5.97%, and is now its highest point since December 2023 when it reached 6.04%.
“Mortgage rates have risen to a three-year high as lenders struggle to readjust rates amid swings in swap rates,” Moneyfacts finance expert Rachel Springall says.
“Major lenders are anticipating an imminent rise in the Bank of England base rate (BBR), and their lowest interest rates are now priced 0.44% lower than they were at the start of September.”
“Lenders can stay away from making aggressive increases over the coming weeks, but most of the damage is unlikely to fully subside. Lenders look at their spreads very carefully, so it would not be wise to price deals too low when uncertainty remains.”
“If the MPC indicates a calmer path on future interest rate expectations, fixed mortgage rates may decline slightly before the year is out, as some may have overcompensated for higher swap rates.”
“The BBR rise will be the first rise in three years, but with conflicts in the Middle East and between Russia and Ukraine remaining on edge, prolonged pressure on global inflation could worsen the outlook for UK interest rates.”
