📌 THIS WEEK IN BRIEF:

The Office for National Statistics reported on 21 October that CPI inflation reached 3.5% in the 12 months to September. Economists had expected 3.4%. Core inflation, which excludes energy, food, alcohol and tobacco, rose to 2.8% from 2.6%, and services inflation rose to 3.7% from 3.4%. Petrol averaged 169.5p a litre in September and diesel 192.5p. ONS chief economist Grant Fitzner said fuel was the main driver and that diesel was at its highest cost since July 2022.

The Bank of England's September forecast had inflation averaging 3.75% in the final quarter of this year, with about 4% in early 2027. September's figure does not break that path, but it does not ease it either. Bank Rate is 3.75%. The Monetary Policy Committee voted 6 to 3 to hold on 17 September, with three members wanting 4%. Schroders' David Rees said after the data that a November rise "now looks like a done deal". ICAEW's Suren Thiru said the pieces were "falling firmly into place for a November rate rise". These are forecasts, not decisions. The committee meets on 5 November.

The rest of the data leaned the same way. Unemployment was 4.7% in the three months to August, down 0.1 points on the year. Regular pay grew 3.7%, with private sector pay at 3.0% and public sector pay at 6.3%. Vacancies were about 691,000, down 37,000 on the year, and payrolled employees were down 111,000 over the year to August. GDP grew 0.1% in August, 0.7% in the three months to August, with services up and construction down for a fourth month running.

Mortgage rates paused. Moneyfacts recorded an average two-year fix of 5.96% and a five-year fix of 5.99% on 16 October, and the five-year average was still 5.99% on 19 October after briefly topping 6%. Moneyfacts' Adam French said it was "far too early to declare that a sustained downward trend is beginning". There are only about 25 fixed deals below 5%, all at 60% loan to value or lower. Moneyfacts also found that the average mortgage deal lasted 13 days in October before lenders withdrew it, against a 2026 average of 16 days and 20 days last year.

First-time buyers: Rightmove's Colleen Babcock says "the rapid rise in mortgage rates is really beginning to hit buyers' budgets". Your First Home is expected to be set out at the Budget on 28 October. Reported terms are a 2.5% deposit and a 20% government equity loan for new-build homes, but nothing is confirmed until then.

Remortgaging: Moneyfacts says nearly 2 million people needed a new fix in 2026 and about half a million still do in the last three months of the year. With deals vanishing in under two weeks, reserve a rate through a broker and keep it under review.

Landlords: ONS shows average private rents up 3.8% to £1,406 in September. Check your rent cover at a mortgage rate above today's average.

Tracker and variable borrowers: A Bank Rate rise would reach you first.

Edition 32 (15 October), we said: a rise on 5 November had become the market's central case, and borrowers should test their payments before the Budget and the Bank meeting.

What happened: The case got stronger. Inflation came in above forecast, unemployment fell and growth held. A hike is still not decided. Fixed rates paused rather than rose: the average two-year was 5.98% on 5 October and 5.96% on 16 October.

The state of the public finances is the other half of the story. Public sector borrowing was £24.5bn in September, £1.9bn above the Office for Budget Responsibility's forecast. From April to September it was £97.8bn, £6.0bn above forecast. Central government debt interest was £10.9bn in September, £2.0bn above forecast and the highest September figure since monthly records began in 1997. Net debt was 94.0% of GDP.

That sets up the Budget on 28 October, the first from Chancellor John Healey, with new OBR forecasts. UBS estimates headroom against the fiscal rules may have shrunk to about £10bn from £23.6bn in March. PwC's estimate is about £14bn. Both are estimates, not official figures.

How private credit stress reaches your street.

PitchBook analysed 27 non-traded business development companies, the retail-facing vehicles that lend to mid-sized companies. In the second quarter their new share sales were $3.3bn, a multiyear low, while payouts to exiting shareholders were $8.1bn. Outflows exceeded inflows for the first time since at least 2022. The 12 largest funds paid $7.6bn against an estimated $19.1bn of requested withdrawals. Funds can prorate payouts at 5% of shares a quarter.

PIMCO's Lotfi Karoui, writing on 13 October, saw "tentative green shoots rather than evidence of a regime shift". New loans carry better protections, but credit losses in older loans "have yet to fully run their course". PIMCO's data show 18.8% of issuers in BDC portfolios were classed as financially distressed in June 2026, against about 8.6% in 2015, and publicly traded BDCs trade at a median 0.7 times book value.

For UK housing the link is indirect. Non-bank lenders hold around 45% of outstanding UK commercial real estate debt, and the Bank of England has said risk-taking in parts of private credit remains elevated. The channel to watch is lending for new homes and rental stock, more than ordinary mortgages.

Sources: PitchBook, PIMCO, Bank of England.

What is happening: Gilt yields eased slightly on the day of the inflation data but are about 0.16 points higher over the month on the 10-year. UBS expects the Budget to unwind most of the 15 to 20 basis points of extra risk it sees priced into 10-year gilts if the fiscal rules are kept. It estimates that breaking them could lift 10-year yields by 25 to 50 basis points. Those are UBS's estimates.

Why it matters: Lenders price fixed mortgages from swap rates, which follow expected Bank Rate and gilt moves. The Budget on 28 October and the Bank decision on 5 November are the next two tests.

Data: Moneyfacts, ONS, Rightmove, Lloyds

Rightmove's October figure is for newly listed homes: up about 1% on the month and 0.1% lower than a year earlier. In London, asking prices rose 2.5% on the month but remain 1.7% below a year ago, and sellers cut the price of 38% of listings. ONS puts annual house price growth at 0.9% in August, down from 1.2%, with London at -2.2% and the North East highest at 3.2%.

ONS data for August show Scottish house prices up 2.9% to an average of £198,000, ahead of the UK's 0.9%. Rents tell a different story. Average Scottish rents rose just 0.7% to £1,011 in September, the lowest annual rent change ever recorded for Scotland in this series. ONS advises caution when comparing Scotland's figures with the rest of the UK.

Lloyds' September index, a different measure, put Scottish prices up 3.4% at an average of £223,330. The two indices agree on direction and differ on level, which is normal for different methods.

Neither source gives a single cause for slow rent growth, so we do not offer one.

Next edition: Wales.

A 13-day average shelf life means a deal you see today may be gone before you apply. Ask your broker what is available at your loan to value, whether the rate is reserved once you apply, and whether you can switch if a better deal appears before completion. Compare total cost including fees, not only the headline rate.

Send questions to [email protected]

This week: "Why does the Budget matter for my mortgage?"

The Budget sets how much the government plans to borrow, and the OBR publishes new forecasts alongside it. If investors doubt the plan, they ask for higher yields to lend to the government, and gilt yields feed into swap rates, which lenders use to price fixed mortgages. UBS estimates that keeping to the fiscal rules could pull 10-year yields down a little, and breaking them could push them up. Nobody knows which way it goes before 28 October.

Educational only. Not financial advice. Always consult an FCA-regulated broker.

1. Fuel drives inflation. Motor fuel prices were 29.8% higher than a year earlier in September, up from 23.0% in August. (ONS, 21 October 2026)

2. Construction keeps shrinking. Construction output fell for a fourth month in a row in August and was down 1.0% in the three months to August. (ONS, 15 October 2026)

3. Debt interest hits a September record. Central government debt interest was £10.9bn in September, the highest for that month since records began in 1997. (ONS, 21 October 2026)

Model your current payments and what a further rise would mean for your monthly budget.

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Fiscus Rebus (formerly UK Property Pulse) sends every Thursday at 7:30am. Subscribe: subscribe.fiscusrebus.com | Contact: [email protected] Fiscus Rebus is not authorised or regulated by the FCA. Nothing here is financial advice. Always consult a qualified, FCA-regulated mortgage broker.

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