Two- and five-year fixes now sit just 2bps apart
Borrowers are choosing shorter fixes in the hope of falling rates, yet 84% of their brokers expect the Bank of England to raise Base Rate before the end of the year, HSBC UK research shows.
The lender’s Q3 Broker Barometer, which surveyed 428 brokers in October 2026, found 77% had seen remortgaging clients opt for shorter fixed-rate periods in anticipation that rates could fall. Just 2% think Base Rate could fall. The 84% figure is in line with the latest forecasts.
The gap puts the length of the fix at the centre of remortgage advice ahead of the next Base Rate decision on November 5.
Base Rate outlook points higher
The Monetary Policy Committee held Base Rate at 3.75% for a fifth consecutive meeting in July, with the vote split widening to 6–3 from 7–2 in June. Year-end forecasts cited by Jeni Browne of Mortgage Finance Brokers ranged from 3.5% to 4.25%.
Following a sixth consecutive hold in September, CPI rose to 3.5% in the 12 months to September, up from 3.1% and the highest since October 2025.
SPF Private Clients chief executive Mark Harris said a Base Rate rise before the end of the year looks increasingly likely.
Fixed-rate pricing near 6%
Moneyfacts data shows the average two-year fix stood at 5.97% and the average five-year fix at 5.99% on October 28. The five-year average hit 6% on October 5, up from 4.94% in early March.
With 2bps between the averages, a two-year fix costs about the same as a five-year deal but brings the next refinancing forward.
Demand for shorter fixes predates the latest repricing. Moneyfactscompare.co.uk found the share of remortgaging users comparing two-year fixes rose from 59.5% in February to 66.5% in June.
Longer terms to manage payments
Brokers reported more term extensions during a busy maturity season, with 73% saying clients were lengthening terms to cut monthly costs. Some 36% cited cuts to household spending and 30% overpayments whenever possible.
FCA data shows around 22,400 mortgages had payments reduced through a term extension or temporary interest-only switch in Q2 2026, up from about 20,100 in Q1.
Remortgage pipeline builds
Remortgage applications rose 31% in the latest quarter, according to CACI’s Residential Mortgage Applications Reporting Service. Many of these borrowers last fixed in 2021 and are looking to reduce repayments.
Bank of England figures show approvals for remortgaging with a different lender rose to 42,600 in September from 34,000 in August.
UK Finance expects external remortgaging to rise by around 10% in 2026, with roughly 1.8 million fixed-rate mortgages due for renewal.
“Brokers were most likely to say the solutions relate to the mortgage product itself, whether that be the length of time over which a rate is fixed, or the overall term of the mortgage,” said Chris Pearson, head of intermediary mortgages at HSBC UK.
Family money in first-time buying
Nearly half (48%) of brokers said more first-time buyer (FTB) clients were using family support than a year ago, against 2% who said fewer were. On whether FTBs find it harder to obtain a mortgage, 44% said it is harder, 37% saw a similar landscape and 20% said it is easier.
House prices were cited as a challenge for FTBs by 56%, mortgage rates by 54% and raising a deposit by 49%.
HSBC UK’s Broker Happiness Index rose to 71 from 69 a year earlier, with 51% scoring their happiness at 8 or higher on a 0–10 scale. Looking six months ahead, 78% cited the wider economic context and market confidence as business concerns, while 5% ranked recruiting good staff among top industry concerns.
