21st October 2026
Britain's rising inflation rate has increased the pressure on the Bank of England to consider raising interest rates, while mortgage borrowers are already facing higher costs.
The latest figures from the Office for National Statistics show annual CPI inflation rising from 3.1% in August to 3.5% in September, above economists' expectations. Higher petrol and diesel prices were major contributors, while services inflation also increased.
The Bank of England's next scheduled interest rate announcement is on 5 November. Its current Bank Rate is 3.75%, and financial markets have been anticipating a possible increase to 4%.
However, a rise is not guaranteed. The Bank must weigh the risk of inflation becoming more persistent against the danger that higher borrowing costs could weaken household spending and economic growth.
Mortgage rates are already rising
Homeowners do not necessarily have to wait for an official rate increase to feel the effects. Lenders have already raised many fixed-rate mortgage deals as financial markets adjust their expectations for interest rates.
Average two-year and five-year fixed mortgage rates were both close to 6% in mid-October, although cheaper deals remain available to borrowers who meet lenders' eligibility requirements.
Those with existing fixed-rate mortgages are generally protected until their deals expire. Tracker mortgage holders, however, could see payments rise if the Bank increases its rate, while changes to standard variable rates depend on individual lenders.
The immediate concern is that households could face higher fuel bills and more expensive borrowing at the same time.
The Bank's November decision will therefore be closely watched. A further rate increase could help restrain inflation, but it would also add to the financial pressure on borrowers already struggling with the cost of living.
For homeowners approaching the end of a fixed-rate deal, the mortgage market is already sending a clear warning: waiting for the Bank's announcement may not mean waiting for mortgage rates to change.