The remortgage gap is widening as second-charge lending grows

We call it the remortgage gap: the difference between the Bank of England's quoted 2-year fixed rate at 75% loan to value and Bank Rate. In September 2025 it was 19 basis points. In September 2026 it was 138.¹

The quoted 2-year fix rose 94 basis points over those 12 months, from 4.19% to 5.13%. Bank Rate went the other way, from a monthly average of 4.00% to 3.75%, where it has stayed since January.¹

Most of the move came in two months. The 2-year fix was 3.97% in February 2026, 4.45% in March and 5.14% in April, when the remortgage gap reached 139 basis points. It eased to 4.79% by July, then rose in August and again in September.¹

The remortgage gap has not closed since. It was 116 basis points in May, 105 in June and 104 in July, then 117 in August and 138 in September, close to April's peak.¹

Five-year fixes took the same path at a slightly lower level: 3.94% in January, 4.96% in April and 4.98% in September.¹

Quoted rates are averages of advertised first-charge rates for new lending, not the rate any borrower will be offered. They are still the clearest monthly read of where fixed-rate pricing is heading.²

Lenders advanced £205.0m of second-charge business in July 2026 across 3,919 agreements, up 2.0% and 1.4% on July 2025. Over the 12 months to July, new business reached £2,384m, up 25%, according to the FLA.⁴

The pace has eased. The three months to July were up 9% by value, and the FLA's Fiona Hoyle said the market "continued to grow in July, although at a more modest pace than earlier in the year".⁴

Month by month the pattern is uneven. March 2026 was the high point at £228m and May the low at £175m, before June and July both came in at £205m.⁵

Deal numbers are growing more slowly than value. The FLA counted 10,992 agreements in the three months to July, up 3%, against 17% growth over 12 months. The average loan has fallen every month since March, to about £52,300 in July.^4,5

A homeowner who wants to raise money against their property has several routes: a further advance from their existing lender, a remortgage of the whole balance, a second charge alongside their current mortgage, or unsecured borrowing. When fixed rates rise, a whole-balance remortgage can mean repricing a cheap existing deal as well as the new money.

That doesn't make a second charge the answer. Second-charge fees vary, a longer term can raise the total cost, and the client may face an early repayment charge either way. The comparison has changed, so set every option out with its total cost.

Fees belong in that comparison. In its March 2026 review of the market the FCA said the second-charge intermediary fees it saw "typically represented 2.5% to 15% of the loan amount". On a large loan that range can outweigh the difference in rate.⁶

• The whole-balance remortgage, including any early repayment charge on the current deal.
• A further advance, if the existing lender offers one.
• The second charge, with its rate, fees and term.
• Then leave the recommendation to the adviser, who assesses suitability and affordability.

The Monetary Policy Committee announces its next Bank Rate decision on 5 November 2026, and the Bank of England publishes October's quoted rates on 6 November. We expect the FLA's August figures in late October, based on the timing of past releases.^3,2