The effective interest rate on newly drawn mortgages increased to 4.63% in September 2026, from 4.60% in August, according to the Bank of England’s tables published on 29 October. The effective rate across the outstanding mortgage stock rose to 4.03%, from 4.00%.
Those two averages describe different groups. New business captures borrowing entering the figures during the reporting period. The outstanding stock includes existing balances, including loans arranged earlier. A gap between them should not be read as the saving available to every borrower who changes lender.
An effective rate is also different from the price on a mortgage-comparison website. It describes interest on actual business or balances rather than a particular advertised offer available today. Eligibility, loan size, deposit, property and product terms still matter to an individual application.
Compare the decision you are actually making
For a household approaching the end of a fixed deal, a useful starting point is the current balance, remaining term and date the existing rate ends. Then compare written illustrations on a consistent basis. Note which charges are paid upfront and which are added to borrowing. Ask what the payment would be after any introductory period and whether leaving early would involve a charge.
Keeping a comparison sheet can make these differences easier to discuss with a mortgage adviser. Include the product fee, valuation or legal costs where applicable, monthly payment and total payable over the period being compared. A national average cannot supply those details for a particular household.
Savings figures require the same care
The release also recorded a 4.42% effective rate on new household time deposits and 1.66% on outstanding sight deposits in September. These are different categories, not a promise that a saver can move between otherwise identical accounts and obtain the difference. Check access restrictions, term, eligibility and current terms before treating two products as substitutes.
For property owners holding money for a purchase, repairs or tax, write down when each part of the money may be needed. That timetable is a useful question to bring to a provider or adviser; a headline rate alone does not answer it.
Source: Bank of England, Effective interest rates, September 2026. The tables are not seasonally adjusted and do not constitute live product quotations.