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The Bank of England has raised the base rate from 3.75% to 4%, its first increase in three years. What does this mean for your mortgage, and what could happen next?
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Today, November 5th 2026, the Bank of England’s Monetary Policy Committee (MPC) voted to raise the base rate by 0.25% to 4%. This takes the rate back to 4%, where it stood between August and December 2025, before the Bank cut it to 3.75%. It is also the first increase in the base rate since August 2023, and ends a run of holds since that December cut.
The decision passed by eight votes to one, with Catherine Mann preferring a larger rise of 0.5%, to 4.25%. Governor Andrew Bailey said today’s increase should not be seen as the first in an inevitable long sequence of rises, but unless the conflict in the Middle East is resolved, neither does it seem likely to be the last. The next decision is due on December 17th 2026.
The rise had been widely expected, and some lenders had already repriced their fixed rates ahead of the announcement.
Edward Checkley, Managing Director at Private Finance, said: “Today’s rise was very much expected. What’s interesting is that the pound has been strengthening ahead of today’s base rate rise, which increases our buying power and reduces the cost of imports, which is deflationary. As the Bank of England has alluded to, today’s rise isn’t a guarantee of further rate rises. It’s very much linked to global inflationary pressures, and in particular ongoing geopolitical conflicts, which directly influence energy prices. It may be that rates don’t increase by as much as some have forecast, and if the pressures on inflation are resolved, swap markets could turn quite quickly and make fixed rates more attractive.”
The Bank’s main concern behind this decision is inflation, largely driven by energy prices. The conflict in the Middle East, now in its ninth month, has disrupted energy supply and contributed to pushing up prices. The Consumer Prices Index (CPI) rose more than expected in September to 3.5%, up from 3.1% in August and well above the Bank’s 2% target.
The Bank now expects inflation to reach around 5% by mid-2027, before falling back. There is still limited evidence of higher energy costs feeding into other prices and wages, but the Bank judged that enough pressure is building to justify a rise.
Tracker mortgages that move in line with the base rate will see an increase in their monthly mortgage payments. According to UK Finance, a 0.25% increase would add £30.72 a month on average to payments for borrowers on tracker rates. When the change takes effect depends on your lender and the terms of your mortgage.
Standard variable rate (SVR) mortgages are set by each lender, which may choose whether and when to pass on a base rate change. UK Finance estimates the average monthly increase for borrowers on an SVR would be £14.28.
Fixed-rate mortgages are unaffected for now. Your payments stay the same until your fixed period ends. However, the rate you move onto next will depend on your individual circumstances and on market conditions at that time, which is where swap rates come in.
Fixed mortgage pricing is driven largely by Sterling Overnight Index Average (SONIA) swap rates, which reflect what markets expect interest rates to average over a given term. Markets had largely priced in today’s rise, which is one reason some fixed rates moved up before the announcement.
Swap rates have eased slightly since our October market update. On October 12th 2026, the two-year swap rate stood at 4.593% and the five-year at 4.677%. At 10am on November 5th 2026, they were 4.501% and 4.489% respectively, according to Chatham Financial. Both remain almost 1% higher than a year ago, when they stood at 3.536% and 3.610%.
UK house price growth has slowed through the autumn. According to Nationwide*, annual growth eased to 0.5% in October, from 0.8% in September, its weakest level since January 2024.
Higher borrowing costs appear to be weighing on buyer demand. Bank of England figures show net mortgage approvals for house purchases fell to 53,400 in September, below the average of around 58,800 over the previous six months.
Nationwide’s Chief Economist, Robert Gardner, linked the slowdown to the Middle East conflict pushing up energy prices and to expectations of further Bank Rate rises. He expects further softness in the near term, but believes the market should regain momentum once the energy shock fades.
For some buyers, a quieter market and higher borrowing costs may create room to negotiate on price, depending on the property, location and individual circumstances.
If you are on a tracker or variable rate: Your payments may change from your next payment date, depending on your lender and the terms of your mortgage. Some tracker products have no early repayment charge, which may give you flexibility to switch, but check your terms first. A broker can help you weigh the certainty of a fixed rate against the flexibility of staying on a variable rate. Our tracker vs fixed rate calculator shows how payments could change if the base rate moves again.
Tracker or fixed calculator
Check how tracker payments could change, against the certainty of a fixed rate.
For illustration only. Not a mortgage offer or advice.
If your fixed rate ends within the next six months: Some lenders may allow you to secure a new rate up to around six months before your current deal ends, although terms vary by lender. If rates fall before your new deal starts, it may be possible to review the options again before completion, subject to the lender’s terms.
If you are buying or moving: Higher rates can affect how much some lenders are willing to lend, as affordability assessments typically take the interest rate into account. You may also be able to take your existing mortgage with you to your new property (known as porting), subject to your lender’s criteria and approval.
Whether you are on a tracker rate, coming to the end of a fixed deal or planning a move, our advisers can review your circumstances and help identify options that may be suitable for you. Private Finance compares over 300 lenders to help find competitive terms suited to your situation.
Call us on 0800 652 0971, email info@privatefinance.co.uk or use the enquiry form below.
This article is based on information available on the date of issue, November 5th 2026.
Last reviewed: November 5th 2026.
Mortgage rates are subject to change and lender criteria. The rates shown are for illustrative purposes only and may not be available to all applicants.
Rates correct as at November 2nd 2026.
Disclaimer: The views and opinions expressed in this content are those of the author and do not constitute financial, legal, or professional advice, nor should they be interpreted as a recommendation. They do not necessarily reflect the official views, policies, or positions of Private Finance, and are not intended to represent broader market or industry perspectives.
Any figures, examples or market commentary are illustrative and based on information available at the time of writing, unless otherwise stated. They should not be taken as a prediction of future interest rates, mortgage costs or property prices. Past trends are not a reliable indicator of future market movements.
*Nationwide’s house price index is based on its own house purchase mortgage lending, recorded when a mortgage is approved following a survey. It does not include cash purchases or homes bought with other lenders’ mortgages. Official figures from HM Land Registry, which cover all completed sales including cash purchases but are published with a two-month delay, showed annual growth of 0.9% in the year to August 2026, with the average UK property price at £273,000.
Sources:
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