The Money Brief #25 - 5 October 2026

On Wednesday the British government paid more to borrow for 30 years than at any point since January 1998. On Tuesday it paid more for 10 years than at any auction since 1999. Those are not abstract numbers: they are the rate your next fixed mortgage will be priced from, the bill the Chancellor has to find room for on 28 October, and, for anyone near retirement, the reason annuity rates (the guaranteed income for life an insurer will pay you in exchange for your pension pot) are at an 18-year high. Same number, three different lives. Grab your Monday coffee. Let me explain the one number behind this week.

A gilt is a loan to the UK government. The yield is the interest rate investors demand to make it. In simple terms, you give the government money, you get paid interest back at the agreed % over the time horizon chosen. We have used that line before and we will use it again, because this week the yield did something it has not done in 28 years.

What happened, in order

Why

Four reasons, each named by the people who trade these things. Oil and gas: Brent at $102 and the UK's reliance on gas for heating and power, so the Iran conflict lands harder here than in France or Germany. The Bank of England: after Governor Bailey and two deputy governors signalled last week that a rate rise is getting harder to avoid, markets now price around 30 basis points of rises by year-end and roughly 90 by the end of 2027, and lenders of long-term money want paying for that. The Budget: investors expect it to raise taxes and still borrow more, and this year's borrowing is already £8.1 billion over forecast. America: US yields are at 2007 highs too, and when the world's biggest borrower pays more, everyone does. The UK moved further than its neighbours, which is the part that is about us.

How we compare

Here is what the seven biggest rich economies pay to borrow for 10 and 30 years, as at Friday's close. The claim doing the rounds that the UK is the first major economy paying 6% refers to the 30-year, and it stands up: no other G7 government's 30-year yield has been above 6%, and on Friday's close the UK was still a quarter of a point above the United States and half a point above France.

Trading Economics, Friday 2 October 2026 close. Brackets show the change over the past 12 months in percentage points.

Notice the brackets. Over the past year the UK's yields have risen less than most of the G7's: France, Japan and the United States have all moved further. The UK is at the top because it started at the top, which is the longer-running problem, not a new one.

What it costs

Last week we told you the government paid £50 billion in debt interest between April and August, £327 million a day. That bill was run up at the old rates. Every gilt the Treasury sells from here is sold at the new ones, and the roughly quarter of the debt that is index-linked gets dearer whenever inflation does. The Office for Budget Responsibility will put a number on it on 28 October; what we can say now is that it moves in one direction and it moves before the Chancellor has announced a single policy.

What it means for you. Three places. Your fixed mortgage rate is priced off swap rates, which follow gilts; the lenders repriced again this week and we cover it below. The Budget now has less room than it had a fortnight ago, which is why every rumour is a revenue-raiser. And if you are near retirement, the same yield that is bad news for the Treasury is the reason annuity rates are at an 18-year high. One Thing To Know takes you through how one number does all three.

Sources: Bloomberg (29 September 2026); Reuters (1 October 2026); Trading Economics (2 October 2026); Office for National Statistics, Public sector finances August 2026 (22 September 2026); US Bureau of Labor Statistics (2 October 2026).

The cleanest measure of what has happened to fixed rates this year is one pair of dates from Moneyfacts, which tracks every deal on the market. Its average two-year fixed rate, across all lenders and all deposit sizes:

On a £250,000 repayment mortgage over 25 years (roughly what a 10% deposit on the average home leaves you borrowing), that is £1,437 a month in February and £1,600 a month now: £163 more, every month, for the same house, just extra interest to pay. Lloyds Banking Group, the country's biggest lender, sees the same thing from its own book: its average customer's monthly payment rose from £1,100 to £1,157 in the year to June, before most of this autumn's increases had landed.

The mechanism is the one we have covered in previous editions, and this week it ran in textbook fashion: gilts up Tuesday and Wednesday, swap rates up with them, lenders repricing by Thursday. The demand side arrived from the Bank of England on Tuesday: mortgage approvals for house purchase fell to 54,900 in August, the lowest since December 2023 and the fourth month running below 60,000; the average rate on newly drawn mortgages rose to 4.6%.

Both are true. Prices have stopped rising and salaries have not, so a home costs fewer times the annual salary than it did: Lloyds' good news. But the cost of borrowing to buy has risen faster than that ratio has fallen: Nationwide's bad news, and the reason only 61% of listings found a buyer in Rightmove's September data. First-time buyers get the better end: Lloyds puts their ratio at 5.9x, also the lowest since 2015.

"Most affordable since 2015" invites the obvious question: compared with what? So here is the average UK house price as a multiple of the typical full-time salary, from government data, every five years since 1970:

UK House Price Index, ONS and HM Land Registry (average UK price, July 2026 is the latest). ONS median full-time salary (April of each year; April 2025 is the latest). TMB calculations.

Three things the table says. For 30 years a home cost three to four salaries, with one spike to five in 1989 that unwound within six years. Between 2000 and 2007 the multiple went from 4.6 to 7.3 and it has never gone back: every low since has sat above the 1989 peak. And today's 7.0x is down from 8.0 at the 2022 peak and back to where it was in the late 2010s, which is Lloyds' point exactly. It is also double what a 1990s buyer faced. But even though the multiple has come down since 2022, prices are still high, and many of the people who bought at that peak did so on fixes taken out below 2%, which is the cliff they are now coming off. Both are true, and which one you feel depends on when you were born.

What it means for you. If your fix ends in the next six months, the rate you are offered this week is priced off a gilt market at a 28-year high; it eased on Friday and it could ease further, or not, and nobody can tell you which. What is within your control is timing: most lenders let you secure an offer up to six months ahead and switch if a better one appears before completion, so the question for a broker is how long a lock-in you can get, not whether rates will fall. If you are a first-time buyer, remember banks will need to ‘stress test’ your affordability, this means assessing your income against a potentially much higher interest rate than the fix you may be applying for, so it may be worth speaking to a qualified mortgage adviser or broker. The multiple is the best it has been in a decade and the monthly cost is the worst; which matters more depends on your deposit and affordability, and MoneyHelper's mortgage affordability calculator runs both for free.

Sources: Moneyfacts via MoneyWeek (1 October 2026); Lloyds Banking Group (1 October 2026); Bank of England, Money and Credit August 2026 (29 September 2026); Nationwide House Price Index (1 October 2026); Rightmove (21 September 2026); UK House Price Index, ONS and HM Land Registry (18 September 2026); Office for National Statistics, Annual Survey of Hours and Earnings (23 October 2025).

Our regular Spotlight: the big markets across four timeframes, because the timeframe you choose decides the story you tell. Figures are as at Friday's close. "This year" means since the first trading day of January; "5 years" is rolling, the same week five years earlier. Oil and the pound keep their seats.

*Bitcoin at time of writing, Saturday; it trades through the weekend. Gilt moves are in percentage points (pp), not percent. Euro row is the inverse of the euro-pound rate.

Three lines deserve a sentence. The FTSE had its worst week in a while, down about 2%, four straight days of losses before a Friday bounce; when gilt yields jump, UK shares, which are priced against them, tend to fall. It is still up 5% this year. Gold and silver kept falling, 7.5% and 9.9% on the month, and gold is now 4% below where it started the year: every rate rise that markets add makes a metal that pays nothing look a little worse, and this month they added several. The five-year column is the perspective: gold has still more than doubled. And the pound rose against the euro to €1.177, its best this year, for the same reason gilts fell: when a country's interest rates are expected to rise faster than its neighbour's, its currency tends to climb. Good news at the airport, bad news at the mortgage desk; it is the same number.

The pension angle: the other side of 6%

An annuity is where you hand an insurer a lump sum from your pension and they pay you an income for life. Insurers fund that income by buying long-dated gilts, so when gilt yields rise, annuity rates rise with them. This week's 30-year yield is why Which? reports the best annuity for a 65-year-old with £100,000 now pays about £8,155 a year (Scottish Widows; Canada Life £8,120), an 18-year high, against roughly £7,100 two years ago and £6,600 in early 2023. Two things worth knowing. First, that is a level, single-life income with no inflation protection; the inflation-linked and joint-life versions pay less. Second, the same move that lifts annuity rates lowers the value of the bonds inside many pension funds' "lifestyling" strategies, which shift savers towards bonds as they approach retirement; if you are within ten years of your pension age and have not looked at how your default fund is invested, your provider's annual statement tells you. Pension Wise, the government's free guidance service through MoneyHelper, covers annuities specifically.

What it means for you. As always with the Spotlight: a picture, not a nudge, and past performance guarantees nothing.

Sources: Trading Economics (2 October 2026); Which? (23 September 2026); Bank of England (30 September 2026); BBC (1 October 2026); Reuters via Fortune (29 September 2026).

Last week was the biggest ETF week since October 2025 and a three-month winning streak. This week was what usually comes after.

That is the pattern we flagged last week when we said the tapering daily flows were the number to watch. The weekly total went from $2.4 billion to $83 million and the price barely moved, which tells you the price was never really about the ETFs; it was about the same risk-on, risk-off swing that moved shares and gilts. On Wednesday, the day the world sold bonds, Bitcoin sold too.

The rest of the board

Trading Economics crypto board, Saturday 3 October 2026.

Four of the six fell on the week; all six are still up on the month and down on the year. "Uptober" is the word you will see this month: October has risen in 10 of the past 15 years, with a median gain of about 11% (CoinDesk). The same data shows that after a positive September, October rose four times out of six, which is a coin flip with a sample size of six. We mention it because readers will see it, not because it tells you anything.

The UK date that mattered: FCA applications for crypto firms opened on Tuesday. The register of who has applied, and who has not, is the thing to watch over the coming months.

Sources: Trading Economics (3 October 2026); Farside Investors (2 October 2026); CoinDesk (28 September 2026); FCA.

Lloyds' Business Barometer, which asks 1,200 firms every month, fell 12 points to 41% in September, a 17-month low. Optimism about the economy fell 18 points to 31%. Services were down 21 points, manufacturing 19. The regional split is stark: the West Midlands at 69%, Wales at 16%, down 38 points in a month. The number that reaches your till is this one: 52% of firms plan to raise their prices in the next year, up one point. Lloyds names energy prices, global uncertainty and weaker demand. For balance: 41% is still above the survey's long-run average of 30%; it is a sharp fall from a high level, not a collapse.

Energy and fuel

The £1,723 cap took effect on Thursday. Oil at $102 is below the $104 of a fortnight ago, which helps the January forecast at the margin; Ofgem confirms that cap on 25 November, and Cornwall Insight updates between now and then.

What it means for you. Half of businesses plan to put prices up, the cost of a mortgage has risen £163 a month since February on a typical loan, and the one piece of good news, the salary multiple, only helps if you can borrow at a rate you can afford. If that squeeze is yours, the help is free and not a last resort: StepChange and Citizens Advice for debt and budgeting, MoneyHelper for the numbers, the Priority Services Register if you are vulnerable and worried about winter energy.

Sources: Lloyds Bank Business Barometer (30 September 2026); Ofgem; Trading Economics (2 October 2026).

Everything in this edition runs through one number, so here is the number, properly.

The gilt

When the government spends more than it raises in tax, it borrows by selling gilts: IOUs that pay a fixed amount of interest each year (the "coupon") and return the original sum on a set date, from 2 years away to 50. They are called gilts because the certificates once had gilded edges. Pension funds, insurers, banks and foreign governments buy them. The government has about £3 trillion of them outstanding.

A gilt's coupon is fixed when it is issued, but the gilt itself is traded every day, and its price moves. The yield is the return you actually get at today's price. Because the coupon does not change, price and yield move in opposite directions: if investors sell gilts and the price falls, the yield rises, and vice versa. So "gilt yields hit 6%" means "investors sold gilts until the fixed interest on them was worth 6% a year of the new, lower price." It is a see-saw with the price on one end and the yield on the other.

Why would investors sell? Three usual reasons, and all three applied this week. They expect inflation to eat the fixed interest, so they want more of it. They expect the Bank of England to raise rates, which makes new gilts pay more and old ones less attractive. Or they worry about how much more the government will need to borrow, because more supply means lower prices.

Readers sometimes ask why the Bank of England does not simply buy gilts to push yields down, as it did in 2009 and 2020. It can, and in September 2022 it did for two weeks when the market was breaking. But buying gilts creates money, and with inflation at 3.1% and rising, the Bank's view is that this would make the problem it is paid to solve worse. The Bank sets one short-term rate; the gilt market sets everything longer, and this week it set it at a 28-year high.

Why it matters to you. You cannot do anything about gilt yields, but knowing the see-saw means the next headline will make sense before anyone explains it. "Gilts rally" is good news for your fix and your Chancellor and mildly bad news for annuity buyers; "gilts sell off" is the reverse. One number, three lives.

Sources: UK Debt Management Office; Bank of England; Office for Budget Responsibility; Which? (23 September 2026).

That is your five minutes on the week one number did three things at once.

If someone you know is about to remortgage, forward them the One Thing To Know. If they are trying to buy, forward them the salary-multiple table; it is the argument they are having with their parents, settled.

The diary

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Thank you,

Ellis

themoneybrief.co.uk

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