Homebuyers and those looking to remortgage might have heaved a sigh of relief following November’s base rate cut, but might now be wondering why fixed mortgage rates have ticked up rather than down.
Barclays and Natwest are among the latest lenders who’ve announced increases to their fixed mortgage rates in recent days, following similar changes made by Santander, HSBC, Nationwide and TSB.
So why are fixed mortgage rates rising when interest rates have fallen? Here, we explain why fixed deals are going up, and what you can do to keep your mortgage costs down.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
What’s pushing fixed mortgage rates up?
Rather than being directly linked to the base rate, fixed mortgage rates are instead more closely tied to swap rates and overall market conditions.
Swap rates are the rates that lenders agree to pay the financial institutions that lend them money to fund their mortgages, and they usually rise or fall in line with how the base rate is expected to move in future. You can read more about how swap rates work in our guide What are swap rates and how do they affect my mortgage?
Swap rates have risen recently following the Budget announcement, with tax increases likely to result in more borrowing, which in turn may lead to higher inflation.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Mortgage rates have been on the rise since the Budget and the US election. Movements haven’t been seismic, but they’ve edged up from 5.39% to 5.42%, halting the steady path of cuts we’ve enjoyed for the past few months. November’s cut is unlikely to turn the tide.
“The Bank and the market are both focusing further ahead, on the fact that the extra spending and borrowing in the Budget – plus the threat of US tariffs – could mean inflation returns at a more significant level. The Bank says it’ll keep an eye out for inflationary risks, and the market is pricing in fewer cuts between now and the end of 2025. We’re likely to see some repricing to reflect that – so mortgage rates could rise again.”
What should borrowers do?
If you’re planning to remortgage soon, or are looking to buy a property, don’t hang around if you spot a deal you like, as it could mean you miss out if it’s withdrawn and replaced with a higher rate deal.
David Hollingworth, associate director at L&C Mortgages, said: “Any borrower agonising over whether to take a fixed rate now should reach a decision sooner rather than later. There are still some extremely sharp rates on offer but these are bound to be feeling the pressure.
“Applying for a deal will secure the rate and avoid any further increases. At the same time they can still review the deal if rates do subsequently drop back.”
Learn more in our guide Should I remortgage now?
Where can I find the cheapest mortgage deals?
Mortgage rates fluctuate all the time, so the cheapest deal today might be pulled tomorrow.
A spokesman for financial website Moneyfactscompare.co.uk said: “The lowest two and three-year fixed rate mortgages have unfortunately jumped up this week and are charged by deals from Santander. Costing £999 in arrangement fees, these mortgages charge 4.27% and 4.23% respectively and can both finance up to a maximum 60% loan-to-value (LTV). Available across Great Britain and Northern Ireland, these deals also include a free valuation (up to £1,190) for borrowers in England, Wales and Northern Ireland – those in Scotland instead receive £95 towards a valuation.”
However, it’s important to note that the best deal for you will depend on your individual circumstances, such as how much you need to borrow, how big a deposit you have or how much equity if remortgaging, and whether you want a fixed rate or are comfortable with a variable rate which will fluctuate over time.
Given how quickly rates can move, it’s worth seeking professional help if you’re not sure which mortgage is likely to be the most cost-effective option for you. If you’re undecided whether you need advice, read our article Should I get advice on my mortgage?
Malcolm Webb, risk director at Legal & General Surveying Services, said: “Right now, average mortgage rates are competitive – you can now find a 5-year fix for around 4% – and this may stimulate new demand in the future. The festive period could slow market activity with everyone taking a well-earned break, but in the new year, we may see a rush of buyers looking to make their move. For anyone taking their next step in the mortgage market, it’s important to take your time and consult a professional advisor before making any concrete financial decisions.”
Learn more about tracking down the best mortgage rates in our article How to get the best mortgage deal in 2025. Bear in mind that you should always look at the overall cost of any deal when considering how competitive it is, rather than concentrating on the headline rate alone. Find out more about this in our guide Why the lowest rate mortgage may not be the cheapest deal.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
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