Waiting for interest rates to fall? Why we stress-test the refinance

DPG News Watch, 6 October 2026. If you're holding off on a deal until mortgage rates come back down, one Bank of England policymaker has just given you something to think about.

What happened. Speaking at a conference on 6 October, Bank of England Monetary Policy Committee member Catherine Mann said that inflation running above the Bank's 2% target appears to have become embedded in the UK economy. She is particularly concerned that inflation could reach around 4% around the turn of the year, which is when many employers and workers negotiate pay rises.

Where rates stand. Bank Rate is currently 3.75%. Since July, Mann has been part of a minority on the committee voting to raise it to 4%. Financial markets are now pricing in a possible rise at the Bank's November meeting. It is important to be clear that nothing has been decided: a November rise is a market expectation, not an announced decision, and Mann is currently in the minority.

This comes on top of a sharp round of mortgage repricing. Fixed rates have already risen across the market in recent weeks, even though Bank Rate itself has not moved, because lenders price fixed deals off swap rates rather than Bank Rate.

Why it matters for our strategy. Our approach is to buy below market value, often at auction, refurbish, and then refinance on the new valuation so the money can be used again. That means the finance that matters most is not the rate on the day you buy. It is the rate available when you refinance, which is often around six months later, once the work is done and lenders are willing to lend on the new value.

If you buy and refurbish now, that refinance could land in spring 2027, which is exactly the period Mann is worried about. A deal that only works if rates fall by then is a deal built on hope.

What we do about it. We run our numbers on the rates available today, then stress-test the refinance at higher rates to see whether the deal still holds up. If the rent no longer covers the mortgage comfortably, or too much of our money would be left in the property, the deal does not make the cut, however good the purchase price looks.

The takeaway. Plan for the rates you might get, not the ones you want. The next Bank of England decision is due on 5 November, and we will be watching.

Source: Reuters, 6 October 2026. This article is for education only and is not financial advice. Lender criteria and rates vary, so speak to a qualified mortgage adviser about your own situation.