Fed raises US rates: what it means for UK mortgages and savings

What the Fed did

Source: Federal Reserve, 16 September 2026.

The Federal Reserve press release of 16 September 2026, for release at 2:00 p.m. EDT, states that the Federal Open Market Committee approved the statement by a 12 to 0 vote. The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate, and is continuing its policy of maintaining ample reserves in the banking system. This is the first US increase in three years.

The statement describes economic activity as expanding at a solid pace. It says uncertainty remains elevated owing in part to geopolitical developments, domestic spending has been resilient, productivity growth is strong and capital investment is robust, job gains have kept pace with the workforce and the unemployment rate has changed little. On prices, the statement says: "Inflation remains elevated. Today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability." The Federal Reserve lists media@frb.gov as its media contact.

Why a US rate rise reaches UK mortgages

UK fixed mortgage rates are priced from sterling swap rates, which reflect expectations of future interest rates rather than the current Bank Rate. Global rate expectations feed into those expectations, so a Fed tightening that shifts the outlook for global yields tends to lift UK swaps, and lenders reprice fixed deals within days. That is the mechanism behind this week's repricing rather than any direct link between the federal funds rate and a UK mortgage contract.

The repricing is already visible in lender behaviour. Family Building Society told intermediaries on 16 September 2026 that it had raised every fixed rate product by 0.60 percentage points across Owner Occupier and Buy to Let lending. Moneyfacts recorded on 15 September 2026 that the average two-year fixed mortgage rate was 5.73 percent, up from 4.84 percent at the start of March 2026, while the average five-year fix was 5.78 percent. Moneyfacts described a second wave of increases across major lenders.

What it means for savers and for the pound

Higher US rates tend to support the dollar against the pound, which raises the cost of dollar-priced imports including oil, and feeds into UK fuel and energy costs with a lag. The currency channel is separate from the mortgage channel: it works through import prices rather than through the swap curve, and it shows up in consumer prices over time rather than on the day of the decision.

For savers, UK deposit rates follow Bank Rate and competition rather than the Fed, so nothing changes automatically today. Fixed-rate bonds are priced from the same swap curve as mortgages, so where mortgage fixes rise, fixed savings rates often follow. Easy access accounts are driven more by Bank Rate and by what individual providers need to attract deposits, which means the spread between the best and worst paying accounts can be wider than any single policy move.

Today's MPC decision

The Bank of England announces at noon on 17 September 2026 with Bank Rate at 3.75 percent. The Monetary Policy Committee publishes its decision alongside the vote split and minutes, so the balance of opinion within the Committee is visible at the same time as the rate itself.

The inflation backdrop is set out in ONS consumer price inflation published on 16 September 2026: CPI rose 3.1 percent in the 12 months to August 2026, up from 2.9 percent, with core CPI at 2.6 percent and food and non-alcoholic drinks at 1.3 percent. ONS labour market data published on 15 September 2026 put total pay growth at 3.9 percent for May to July 2026. No prediction is made here about the outcome of the MPC's decision.

What a borrower or saver should do today

Anyone with a fix ending within six months can usually reserve a new rate now and switch if rates fall before completion, at no cost with most lenders. Most UK lenders allow a borrower to reserve a new rate up to six months before an existing deal ends and to switch to a lower rate if one becomes available before completion. That option has value whichever way the MPC moves, because it sets a ceiling on the rate without removing the chance to take a cheaper one later.

Check whether an existing offer has an expiry date, since mortgage offers typically remain valid for three to six months from issue. Savers with money in an easy access account paying below Bank Rate should compare, since the gap between the best and worst rates is wider than any single policy move. Fixed-rate savings are priced from the same swap curve as fixed mortgages, so the direction of fixed savings rates tends to track the direction of fixed mortgage rates.

Source: Federal Reserve FOMC statement, 16 September 2026.

Related coverage on Kael Tripton: Mortgage Rates Are Falling Before the Bank Even Moves: What Was Cut and Whether to Fix, What Are Swap Rates? How They Affect UK Mortgage Rates Explained, What Is the Bank of England Bank Rate?, UK mortgage rate index 2026: average rates, Bank Rate movements and what to expect, UK Building Societies: How They Differ from Banks and Best Savings Rates.

Frequently asked questions

What did the Federal Open Market Committee decide on 16 September 2026?

The FOMC approved the statement by a 12 to 0 vote and raised the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate, and is continuing its policy of maintaining ample reserves in the banking system.

Why do UK fixed mortgage rates move when the Fed raises US rates?

UK fixed mortgage rates are priced from sterling swap rates, which reflect expectations of future interest rates rather than the current Bank Rate. Global rate expectations feed into those expectations, so a Fed tightening that shifts the outlook for global yields tends to lift UK swaps, and lenders reprice fixed deals within days.

Have UK lenders already repriced?

Yes. Family Building Society told intermediaries on 16 September 2026 that it had raised every fixed rate product by 0.60 percentage points across Owner Occupier and Buy to Let lending. Moneyfacts recorded on 15 September 2026 that the average two-year fixed mortgage rate was 5.73 percent, up from 4.84 percent at the start of March 2026, with the average five-year fix at 5.78 percent.

Do UK savings rates change automatically when the Fed moves?

No. UK deposit rates follow Bank Rate and competition rather than the Fed, so nothing changes automatically today. Fixed-rate bonds are priced from the same swap curve as mortgages, so where mortgage fixes rise, fixed savings rates often follow.

What is the Bank of England doing today?

The Bank of England announces at noon on 17 September 2026 with Bank Rate at 3.75 percent, and publishes the vote split and minutes alongside the decision. CPI rose 3.1 percent in the 12 months to August 2026, with core at 2.6 percent and food at 1.3 percent, and ONS data on 15 September 2026 put total pay growth at 3.9 percent.