The Bank Held at 3.75%, and Expects Inflation to Rise Into 2027

The Bank of England held Bank Rate at 3.75% on 17 September 2026. Three of the nine Committee members voted to raise it to 4%.

The forecast published alongside the decision matters more than the split. Twelve month CPI inflation was 3.1% in August. The Committee expects it to reach around 3.75% in the final quarter of this year and slightly above 4% in the first quarter of 2027. All from the Monetary Policy Summary and Minutes of 17 September 2026.

A rising inflation forecast is not a falling rate forecast

A good many borrowers are still working on the assumption that the next move is downward and the only open question is timing. The Bank's own published expectation is that inflation moves further from its 2% target before it moves back towards it.

Fixed rates are not set by Bank Rate in any case. They are priced from funding costs and from where the market expects rates to go, with swap rates doing most of that work. A change in the expected path reaches fixed rate pricing well before it reaches a Committee vote.

Why the term of the product decides how much you can borrow

Buy to let borrowing is sized by rental cover rather than by the borrower's income. The rent has to cover the mortgage interest, and the rate used in that calculation is not always the rate being paid.

On shorter term fixed rates and on variable products, the rent is generally tested against a stressed rate set above the pay rate. Five year fixes are typically stressed at the rate actually being paid.

That is not a technicality. The same property, producing the same rent, will support a different loan depending on the term chosen.

Which leaves landlords with a real choice

Take the longer fix, and the rental calculation will generally support more borrowing against the same rent.

Or take the shorter term, accept that the calculation supports less, and make up the difference with a larger deposit, on the basis that rates will be lower by the time it ends.

The second route is a position on where rates go. There is no certainty that they fall. The Bank's own published forecast has inflation rising into early 2027, and three Committee members voted this month to raise rather than hold. Putting in a bigger deposit to keep that option open means committing real cash now against an outcome nobody can promise.

Neither route is automatically the right one. It turns on how long the property is being held and what cash is available. The point is that it should be decided deliberately, rather than arrived at through whichever product happened to be looked at first.

Expat and non resident cases turn on the rent, not the salary

The same applies to a borrower living abroad. A buy to let application is assessed on what the property earns, not on what the applicant earns. Clients often arrive expecting the difficulty to be evidencing a foreign salary. For buy to let it generally is not.

What differs is the starting point. Deposits on expat buy to let generally run between 25% and 35%, against around 20% on expat residential. A borrower already committing a third of the purchase price has less room to fund a larger deposit as a way of buying flexibility on the term.

What it means in practice

If your product ends within the next twelve months, you are planning against a published forecast that rises before it falls.

Worth establishing before an application rather than during one: the current rent on the property, a realistic view of what it is worth now, and the date the product ends.

If you want to look at where a case sits against those, get in touch and we will go through it.

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Sources

• Bank of England, Monetary Policy Summary and Minutes, September 2026, published 17 September 2026
• LHS Worldwide practitioner experience, September 2026