The Monetary Policy Committee (MPC) of the Bank of England (BoE) is expected to meet on 17 September to decide whether to raise interest rates to 4 per cent. This decision could have a major effect on mortgage costs for homeowners, businesses, and the UK economy as a whole. With inflation still rising and global bond markets showing signs of stress, financial markets are increasingly expecting the BoE to increase interest rates. Such a move would be good news for savers but could make borrowing more expensive for those with mortgages or loans. In the past four weeks, the yield on two-year UK gilts—government bonds that are a key indicator of interest rate expectations—has risen by more than 7 per cent. The current yield on these bonds is 4.54 per cent, while the BoE’s base interest rate remains at 3.75 per cent. Financial markets are predicting up to three additional rate hikes in the coming months, although these expectations can change and do not always lead to actual policy decisions by the MPC. The BoE’s chief economist, Huw Pill, has suggested that interest rates may need to be increased further. For homeowners looking to renew their mortgage agreements—approximately 900,000 people are expected to do so in the second half of 2026—this could mean significantly higher interest payments if they delay securing a new deal or switch to their lender’s Standard Variable Rate (SVR), which usually rises in line with the BoE’s base rate. According to Moneyfacts data, the average two-year tracker mortgage rate was 4.51 per cent as of Friday, while the average standard variable rate on 1 September was 7.13 per cent. On a £250,000 mortgage over 25 years, the difference in monthly payments between these two deals is nearly £400, or £4,760 annually. If the BoE raises the base rate to 4 per cent, most lenders would likely increase their SVR the following month, leading to a monthly payment increase of just over £40, or £483 a year. Experts and mortgage brokers are advising borrowers to secure a mortgage deal before their current one expires. Most lenders allow borrowers to lock in a new deal once they are within the last six months of their existing fixed-term mortgage. If better terms become available before the new deal starts, borrowers may be able to switch. However, lenders are increasingly removing their best deals and replacing them with more expensive options, making it crucial for borrowers to act quickly. Coventry Building Society raised rates on several of its mortgage products on Thursday, with more expected to follow. Justin Moy, managing director at EHF Mortgages, urged borrowers to secure a deal as soon as possible, noting that lenders have little choice but to increase rates as borrowing costs rise. He emphasized the importance of securing a mortgage deal now, especially for those planning to remortgage in the coming months or those still on lower rates from 2022. HSBC made some reductions across its mortgage range on 1 September, but the best deals tend to be removed quickly as overall interest rates rise. David Stirling, an independent financial adviser at Mint Wealth, recommended that those looking to remortgage or buy a home should lock in a rate now rather than waiting. He warned that waiting in this market often means missing out on the desired rate, as it can disappear quickly.