Bank of England reduces APF gilt holdings by £70 billion: what the programme means for your mortgage

What the source announced

At its September 2025 meeting, the Monetary Policy Committee voted to reduce the stock of gilts held in the Asset Purchase Facility by £70 billion over the period from October 2025 to September 2026, targeting a total of £488 billion (Bank of England APF Gilt Sales Market Notice, March 2026). The Asset Purchase Facility holds UK government bonds accumulated during rounds of quantitative easing; reducing those holdings through open-market sales is the process known as quantitative tightening.

The MPC's September 2025 decision set two fixed parameters: a £70 billion reduction in APF gilt holdings over the year from October 2025, and a £488 billion total stock as the programme's end-point (Bank of England APF Gilt Sales Market Notice, March 2026).

What this means for your mortgage

The channel between the APF sales programme and mortgage costs runs through gilt yields. When the Bank of England sells gilts into the secondary market, it adds to the supply of UK government bonds in circulation. Increased supply tends to put upward pressure on yields. Fixed-rate mortgage offers are priced by lenders against swap rates, which track the expected path of short-term rates and move in close correlation with medium-term gilt yields — particularly the two-year and five-year maturities that correspond to the most common fixed-term choices.

The scale of the programme — a £70 billion reduction in APF holdings across October 2025 to September 2026 — represents a sustained addition to gilt supply over a full year (Bank of England APF Gilt Sales Market Notice, March 2026). Lenders price new fixed-rate deals against the expected forward path of swap rates, which means the anticipated pattern of gilt sales is typically reflected in the headline fixed rate offered to borrowers before any individual application is made.

Tracker mortgages and standard variable rate products price directly against the Bank Rate set by the MPC at each policy meeting, not against gilt yields. For those products, the APF programme operates at one remove. For fixed-rate deals, the swap-rate channel makes the gilt market a more immediate input into the rate set at the point of application.

Borrowers approaching the end of a fixed-rate term can use the mortgage calculator to compare monthly payments across different rate scenarios and see how the total interest cost changes over the life of the loan. Calculate your mortgage payment →