Could stronger economy make a December rate rise more likely?

The Bank of England needs to be extremely cautious about raising interest rates again. One encouraging month of economic growth is absolutely no justification for piling further misery onto millions of households and businesses.

The economy is hardly firing on all cylinders. Higher borrowing costs risk choking off the very growth Britain desperately needs, while doing precious little to tackle inflation driven by energy prices and other external pressures.

Mortgage borrowers have already endured years of financial punishment. Another rate rise would squeeze household budgets, dampen consumer spending and undermine confidence in the housing market.

The Bank must not become so obsessed with fighting inflation that it strangles the economic recovery in the process.

For borrowers approaching remortgage, securing a competitive deal now, ideally one that can be switched if rates improve, is sensible. Gambling on rates falling is not.

Stronger growth is welcome, but it creates a mixed picture for property borrowers if it reinforces expectations of another rate rise. Fixed mortgage pricing can move before the Bank of England makes its decision, as lenders respond to changing funding costs. the UK's central bank

For someone using bridging finance, the important rate may be the one available when they refinance. A fixed-rate bridge provides certainty during its term, but it doesn’t fix the cost or availability of the mortgage intended to repay it.

That is why brokers need to keep checking the planned exit as a project progresses. A refurbishment can stay on budget while the refinancing figures change around it. Stronger economic growth could help confidence and demand, but borrowers still need the numbers to work on their own property.

My assessment is that September’s stronger growth strengthens the case for another increase, but December is not a foregone conclusion. The next inflation and wage figures will matter. Borrowers should not assume fixed rates will wait for the meeting, as they can move within days if expectations shift. Equally, the evidence this week does not support a blanket claim that fixed rates are rising. Santander cut fixed rates on 12 November, and Rightmove’s average two and five year fixes fell to 5.47% and 5.45%.

I would encourage anyone within six months of their deal ending to review their options now and, where suitable, reserve a rate. Some lenders let you change the product before it starts, but conditions vary. On a £200,000, 25 year repayment mortgage, a rise from 5% to 5.25% would add about £29 a month. A stronger national figure does not automatically mean households in Wales are better off, and I would be cautious about predicting house price growth from one GDP release.

It's a curious situation when good economic news starts to look like bad news for mortgage borrowers. The economy is growing, which should be cause for celebration, but the Bank of England may see it as another reason to keep the pressure on interest rates. Borrowers are effectively caught between a resilient economy and the cost of borrowing that comes with it. My advice is not to try to second-guess the Bank of England or play interest-rate roulette. If your mortgage deal is coming to an end, get ahead of it, secure a rate you're comfortable with and keep your options open. Procrastination could cost you money in the long run.

The economy growing faster than expected is good news, unless you're a borrower hoping for an interest rate cut!

Stronger growth gives the Bank of England more room to keep rates higher, particularly with inflation still a concern. December's decision isn't guaranteed, though.

Lenders are already adjusting fixed rates, but these respond primarily to swap rates and funding costs, not simply Bank Rate. Some deals are getting cheaper while others are rising.

For someone with £200,000 outstanding, another 0.25% rise would add roughly £42 a month on an interest-only tracker. Repayment mortgages differ, and SVRs don't necessarily move in line with Bank Rate.

I'd urge anyone whose fix expires within six months to secure an option now and review it if rates improve.

A stronger economy could support employment and wages, but there's a catch.

A stronger economy means little to homeowners if their pay rise disappears into higher mortgage payments!

The strongest quarterly GDP growth in over two years makes a December rate rise by 0.25% to 4.25% far more likely but the good news on the economy depends on which sector you are employed in as services grew 0.9%, but manufacturing managed an anaemic 0.1% and construction fell 0.7%, with pubs, restaurants and catering down 1.9%. The economy can absorb tighter policy while the Bank tackles inflation that has sat above the 2% target since October 2024. Markets now price a 75% chance of a hike, and if next Wednesday’s CPI beats last month’s 3.5%, it’s pretty much nailed on. Fixed mortgage rates track SONIA swaps, not the MPC calendar, so lenders reprice instantly. A few banks trimmed low-LTV rates this week to hit annual targets, but this week’s GDP print means those cuts will likely reverse. If your fix ends within six months, lock in now: it’s free insurance, as you can switch if deals drop. Another 0.25-point hike adds roughly £28–£31 a month to a £200,000 repayment tracker or SVR.