UK Interest Rates Rise to 4% – What It Means for Your Mortgage
Published By FJP Investment Editorial Team
The Bank of England raised the UK base rate from 3.75% to 4% on Thursday 5 November 2026, its first increase since August 2023. Eight members of the Monetary Policy Committee backed the rise of 0.25 percentage points. The ninth favoured a larger rise to 4.25%. (Bank of England decision and Bank Rate history)
If you have a mortgage, the effect on your monthly payment depends on the type of deal you have and when its rate can change.
Why did the Bank of England raise interest rates?
Higher energy prices were central to the decision. The Bank pointed to the impact of the Middle East conflict on fuel and utility costs, and to the risk that those higher costs feed into a wider range of prices and wages. Economic activity had also been stronger than the Bank expected. (Bank of England minutes)
UK consumer price inflation was 3.5% in September. The Bank’s November forecast puts it at around 5% by mid-2027, above its 2% target. The rise in Bank Rate is intended to restrain spending and limit the spread of those price pressures through the economy. (November Monetary Policy Report)
Will my mortgage payments go up?
| Mortgage type | What the Bank Rate rise means |
|---|---|
| Tracker linked to Bank Rate | The mortgage rate typically rises by 0.25 percentage points when the change takes effect under the deal’s terms. The lender can confirm the new payment and the date it starts. |
| Existing fixed rate | The agreed rate applies until the fixed period ends. After that, the lender’s follow-on rate or the rate on a new deal applies. |
| Standard variable rate (SVR) | The lender sets the rate. The size and timing of any change depend on its decision and the mortgage terms. |
MoneyHelper’s guide to mortgage rates and payments
How much could a £200,000 tracker mortgage go up?
Take a tracker set at Bank Rate plus 0.75 percentage points. Its mortgage rate would rise from 4.50% to 4.75% once the full change takes effect. The estimates below use the same £200,000 balance at both rates and a remaining term of 25 years for the repayment mortgage.
| Mortgage type | Monthly payment at 4.50% | Monthly payment at 4.75% | Monthly increase |
|---|---|---|---|
| Repayment | £1,111.66 | £1,140.23 | £28.57 |
| Interest-only | £750.00 | £791.67 | £41.67 |
The repayment example includes principal and interest. The interest-only example shows the monthly interest on the full balance. Both use monthly interest calculations before fees. A lender’s payment notice gives the actual amount and takes account of when the new rate starts.
Will new fixed mortgage rates rise as well?
Lenders price new fixes using their funding costs and the cost of managing interest rate risk over the fixed period. Swap rates reflect market expectations about where interest rates are heading, so new mortgage deals can move before a Bank Rate decision. Lender competition also affects the deals on offer. (IMLA’s explanation of swap rates and MoneyHelper’s guide to rate changes)
Nationwide cut selected two-, three- and five-year fixed rates by up to 0.15 percentage points from 4 November, one day before the Bank’s announcement. The changes illustrate how prices on individual fixed deals can move separately from Bank Rate. (Nationwide’s 3 November announcement)
If your fix is ending, use the balance and term you expect to have left when comparing payments on new deals. A product fee also affects the total cost of the deal. (MoneyHelper’s guide to preparing for a rate change)
What does the rate rise mean for landlords and savers?
A landlord whose mortgage reprices can use the interest-only example to estimate the impact on rental cash flow before tax. With the rent and other costs held constant, every pound of extra interest reduces that cash flow by a pound. (FJP’s analysis of UK borrowing costs and property)
Banks and building societies set the rates they pay on savings accounts. Variable savings rates can change at different times across providers. (MoneyHelper’s savings guidance and FJP’s cash ISA allowance guide)
When is the next Bank of England interest rate decision?
The next scheduled decision is Thursday 17 December 2026. The committee says it will assess the evidence at each meeting, including whether higher energy costs are spreading to other prices and wages. (Bank of England calendar and November minutes)
FJP Investment publishes this article for general information and acts solely as an introducer.
