UK remortgage approvals jump 25% as purchase approvals fall to their lowest since 2023. Two-year or five-year fix?
Remortgage approvals rose 25% to 42,600 in September. What a two-year fix has to beat when the averages sit level with five-year deals.
Lenders approved 42,600 remortgages in September, up 25% from 34,000 in August, while approvals for home purchases fell to 53,400, the lowest since December 2023 (Bank of England, 29 October 2026).
What the Bank's September figures show
Purchase approvals have now fallen for three months in a row and are about 19% lower than a year ago (Mortgage Solutions, 29 October 2026). Net mortgage borrowing slipped to GBP 3.9bn from GBP 4.2bn (Bank of England).
The effective rate on newly drawn mortgages rose to 4.63% from 4.60%, and the rate on the stock of outstanding mortgages edged up to 4.03% (Bank of England, 29 October 2026). Those are rates on loans actually drawn, many agreed months earlier. Products on sale today cost more: Moneyfacts put the average two-year fix at 5.96% and the average five-year fix at 5.99% on 15 October (via The Intermediary).
The Bank's remortgage figure counts only remortgages with a different lender, so product switches with an existing lender are not in it. Katie Clinton of KPMG UK said the rise "points to more borrowers refinancing as existing deals expire" (The Intermediary, 29 October 2026).
Bank Rate is 3.75%, and the next decision is due on 5 November (Bank of England).
Two-year or five-year when the averages are level
Anyone remortgaging now faces the same choice: lock in for five years, or take two and refinance in late 2028. The Rate Break-Even Analyser in Stresst is built for that question. You enter the loan, each fix's length, rate and arrangement fee, plus the fee you expect to pay when the shorter fix ends.
Take an illustrative GBP 200,000 repayment mortgage over 25 years, with the Moneyfacts averages: two years at 5.96% and five years at 5.99%, each with an illustrative GBP 999 fee, and GBP 999 to refinance in 2028.
The analyser says the shorter fix is not at a higher rate, so there is no rate fall to work out. It still shows the cost of the shorter route over its first two years:
- Extra interest: minus GBP 120, as the two-year rate is slightly lower
- Refinance fee: GBP 999
- Extra cost of the shorter fix: GBP 879
So with the averages this close, the second set of fees outweighs the rate difference.
How far rates would need to fall for a fee-free two-year deal
Now compare an illustrative fee-free two-year fix at 6.25% with the five-year at 5.99% and its GBP 999 fee, on the same GBP 200,000 loan.
The analyser's verdict: rates would need to fall to 5.80% or below when the two-year fix ends for it to cost the same as the five-year fix. Its figures:
- Total cost, 5-year fix: GBP 58,080 in interest and fees
- Cost during the 2-year fix: GBP 24,585
- Extra cost of the shorter fix: GBP 1,038, to be made up over the remaining 3 years
- Balance at refinance: GBP 192,921
Put a GBP 999 fee on the two-year deal as well and the break-even rate drops to 5.63%. On a GBP 100,000 loan, the same pair needs 5.45%, because fees weigh more against a smaller balance. At GBP 300,000 it's 5.68%.
Run your own numbers in Stresst
Every worked figure above came out of the Stresst app. Put in the two deals you've been quoted and your own balance, and you'll see the rate a shorter fix has to beat in a couple of minutes.
The Rate Break-Even Analyser is part of Premium, along with UK Affordability, Ltd vs Personal Name - Section 24 and PDF export on every calculator, and Premium starts with a 7-day free trial. The Remortgage Calculator, Mortgage Payment, Overpayment and the Stamp Duty Calculator are free.
The Bank of England announces its next rate decision on 5 November, and the quotes you're comparing could change after it. On iPhone, Stresst is in beta through Apple's TestFlight app.
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Know your numbers before you commit.
Sources
- Bank of England, Money and Credit September 2026, 29 October 2026. https://www.bankofengland.co.uk/statistics/money-and-credit/2026/september-2026
- Mortgage Solutions, "Mortgage approvals for house purchases continue to slide", 29 October 2026. https://www.mortgagesolutions.co.uk/mortgage-news/2026/10/29/mortgage-approvals-for-house-purchases-continue-to-slide/
- The Intermediary, "Mortgage approvals and borrowing drop as remortgaging rises in September", 29 October 2026. https://theintermediary.co.uk/2026/10/mortgage-approvals-and-borrowing-drop-as-remortgaging-rises-in-september-boe/
- Evening Standard via AOL, "Mortgage approvals fall further to lowest since 2023", 29 October 2026. https://www.aol.co.uk/articles/mortgage-approvals-fall-further-lowest-102337000.html
- The Intermediary, "Average mortgage rate holds at 5.88%" (Moneyfacts), 15 October 2026. https://theintermediary.co.uk/2026/10/average-mortgage-rate-holds-at-5-88-moneyfacts/
- Bank of England, "Interest rates and Bank Rate: our latest decision", accessed 30 October 2026. https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
This article is general information only and is not financial, tax or legal advice.