HSBC has raised several of its mortgage rates this week, while other major lenders have opted to keep their deals steady as the market approaches winter with caution. According to data from Uswitch, the average two-year fixed mortgage rate has fallen slightly to 4.74%, whereas the average five-year fix has risen from 4.99% to 5.04%. These figures are based on a 75% loan-to-value (LTV) mortgage, meaning borrowers are required to put down a 25% deposit.
The changes come after the Bank of England (BoE) decided to hold its base rate at 4% in September. Analysts believe that another rate cut is unlikely this year, given persistent inflationary pressures and uncertainty around the upcoming Budget. Inflation remains stubborn at 3.8% as of August, suggesting that borrowing costs may remain elevated for some time.
Rachel Springall, a finance expert at Moneyfacts, commented that borrowers might be disappointed to see mortgage rates creeping back up. She explained that volatile swap rates and a cautious stance from lenders have disrupted the steady decline in average rates seen over the past few months.
Springall added that lenders have taken a more measured approach recently, resulting in the average shelf life of mortgage products increasing to 22 days — the first time in six months it has surpassed the 20-day mark. This suggests a calmer market environment, though activity could pick up if banks seek to meet year-end lending targets.
Swap rates, which reflect market expectations for future BoE rate movements, play a crucial role in determining lender pricing. As these rates fluctuate, banks adjust their mortgage offerings accordingly, sometimes resulting in higher rates for borrowers even when the central bank holds its base rate steady.
Data from Moneyfacts also shows that while the total number of mortgage products available fell to 6,998 in September, the average shelf life of these deals lengthened. Simon Gammon of Knight Frank Finance said that lenders are treading carefully, with some slightly raising rates, but he doesn’t believe this marks the beginning of a sustained rise in borrowing costs.
HSBC has been among the lenders to make adjustments, increasing its five-year fixed rate to 4.06% from 3.99%, with a £999 fee. Its Premier Standard customers will see a slightly lower rate of 4.03%. The two-year fixed rate has also risen to 3.90% from 3.84%. These deals are based on a 60% LTV, requiring a 40% deposit.
For borrowers with smaller deposits, HSBC’s 95% LTV products — where only a 5% deposit is needed — remain available but come with higher rates. A two-year fix now stands at 4.96%, while a five-year fix sits at 4.89%. As always, the size of a borrower’s deposit plays a significant role in determining the interest rate offered, as lower deposits are seen as higher risk.
Other major lenders have taken a steadier approach. NatWest continues to offer a five-year fix at 4.02% and a two-year fix at 3.94%, both requiring a 40% deposit. Barclays has also left its deals unchanged, with a five-year fix at 4.11% and a two-year fix at 3.92%, each with an £899 product fee.
Nationwide, another key player in the mortgage market, is maintaining its five-year fix at 4.22% and two-year fix at 3.99%, both requiring a 40% deposit. The lender recently announced that it will be reviewing its product range in mid-October and may make further adjustments.
Halifax, the UK’s largest mortgage lender, has increased its five-year rate to 4.09% from 3.97% and its two-year fix to 3.87% from 3.82%, both with a £999 fee. Meanwhile, Santander has made selective product withdrawals, including some 60% LTV offers for first-time buyers, as part of a broader reprice following changes in swap rates.
Among the major banks, NatWest currently offers the cheapest five-year fixed rate at 4.02%, while Halifax holds the lowest two-year rate at 3.87%. However, both require substantial deposits of at least 40%, which remains a barrier for many first-time buyers.
Across the broader market, affordability pressures continue to weigh heavily on buyers and homeowners alike. Rising mortgage rates have led to higher monthly repayments, and with 1.3 million fixed-rate deals set to expire this year, many households could soon face increased costs.
Some lenders, such as Skipton Building Society and Leeds Building Society, are seeking to ease access to homeownership by allowing borrowers to take on higher loan-to-income ratios or longer mortgage terms. However, the broader market outlook remains uncertain as the BoE navigates the balance between controlling inflation and supporting growth.
With the next interest rate decision due in November, borrowers and savers alike will be watching closely to see if the central bank maintains its current stance or signals any change for 2026. For now, it seems mortgage rates may remain elevated, with little sign of a substantial drop before the end of the year.
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