The Bank of England raised Bank Rate to 4% on Thursday 5 November 2026, its first increase in more than three years. The Monetary Policy Committee voted eight to one for the quarter-point rise, from 3.75%, with the single dissenter, Catherine Mann, favouring a larger half-point move to 4.25%. The decision, announced at noon that day, ended a run of cuts and holds that had kept Bank Rate at 3.75% since December 2025, and it landed on a mortgage market where fixed deals had already been getting more expensive for weeks.
The Bank's reason was inflation. Consumer Prices Index inflation reached 3.5% in the 12 months to September 2026, up from 3.1% in August and well above the Bank's 2% target, driven in large part by higher energy prices. In its November statement the Committee said there was "limited evidence of knock-on effects on other prices and wages" so far, but that "the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase in Bank Rate". Governor Andrew Bailey added that unless progress was made on resolving the conflict in the Middle East, "a further increase in bank rate may be warranted".
For borrowers, the important point is that fixed mortgage rates had already moved before the Bank did. Fixed deals are priced on where markets expect Bank Rate to go, not on where it sits today, and through September and October 2026 markets steadily priced in a rise. Moneyfacts, which tracks the whole market, put the average two-year fixed rate at 5.98% and the average five-year fix at 6.00% on 5 October 2026 — the five-year average's first time at 6% in about three years. At the start of September, 1,494 fixed deals were priced below 5%; by 5 October, only nine were. The average standard variable rate stood at 7.13%.
What the new rates cost in pounds
Percentages hide the monthly reality, so here is the worked example. Take a £200,000 repayment mortgage over 25 years. At the 5 October average two-year fix of 5.98%, the monthly payment is £1,286. At 4% — the level of Bank Rate itself after the November rise, and roughly where many borrowers' old deals sat — the same loan costs £1,056 a month. The difference is £230 a month, or £2,766 over a year, for borrowing the same sum over the same term. Those payments are calculated from the published average rates; an individual borrower's rate depends on deposit size, credit record and lender, and the cheapest deals go to the largest deposits.
The gap widens further for anyone who drifts onto a lender's standard variable rate when a deal ends. At the 5 October average SVR of 7.13%, that £200,000 loan costs £1,430 a month — £144 a month more than the average two-year fix, and £374 a month more than at 4%. The SVR is the default rate borrowers fall onto when a fixed or tracker deal expires, and it is changeable at the lender's discretion. It is the most expensive place in the mortgage market to sit still.
Trackers tell a different story. A tracker follows Bank Rate directly, at a set margin above it, so the November rise feeds through to tracker payments within weeks. But because fixed rates had already risen in anticipation, trackers were, for a time, the cheaper option: at the end of September 2026 Moneyfacts put the average two-year tracker at 4.45%, against an average two-year fix of 5.94% — a gap of 1.49 percentage points, the widest since November 2022. On a £250,000 loan over 25 years, the average two-year fix cost about £1,602 a month, against about £1,383 on the average tracker.
Fixed or tracker: the choice as it stands
The choice is a trade between certainty and flexibility. A fixed rate buys a known payment for two or five years, whatever the Bank does next — valuable when the Governor is openly warning another rise may be warranted. The price is that if rates fall, the borrower does not benefit until the deal ends, and leaving early usually triggers a charge. A tracker does the opposite: if the Bank cuts, the payment falls within a month or two, but if it rises, so does the bill, with no ceiling. Trackers often come without early repayment charges, which suits people who may move soon.
There is no right answer in general, only a right answer for one household. The question to ask is not where rates will be in two years — nobody knows, and the Bank itself has just changed direction — but whether the household could still afford the payment if rates stayed where they are, or went up by another quarter or half point. A borrower who could not absorb another rise should think hard before taking a tracker; a borrower with room to absorb it, and a reason to want flexibility, may find the tracker cheaper for now.
The six-month remortgage window
For homeowners whose deal ends in the next six months, the time to act is now, not in the final fortnight. Most lenders let borrowers reserve a new deal well ahead of the current one finishing, and if rates improve before completion, a good broker or lender will usually let the borrower switch to the better product. With mortgage products lasting an average of just 13 days on sale in September 2026, according to Moneyfacts — the fastest repricing on record — a deal seen on a Monday may genuinely be gone by the following week. A product transfer means staying with the current lender: usually quicker, with less paperwork. Switching lender can unlock a better rate but involves a fuller application. Compare the two on total cost over the deal period — rate, fees and all.
First-time buyers: the deposit still does the heavy lifting
For those trying to get on the ladder, rates matter, but the deposit still does most of the work. The bigger the deposit relative to the price, the better the rates lenders offer, because the borrower represents less risk. Moneyfacts' October figures show the spread clearly: at 60% loan-to-value, the average two-year fix was 5.42% and the average five-year fix 5.60%; at 95% loan-to-value — the territory of the smallest deposits — the averages were 6.37% and 6.30%. Crossing a deposit threshold can therefore be worth more than waiting for a better headline rate.
If payments get tight
If payments become a struggle, act early. Lenders are required to treat customers in difficulty fairly, and there are well-established routes — temporary payment arrangements, switching to interest-only for a period, or extending the term — all far easier to arrange before payments are missed than after. Free, impartial money advice is available from Citizens Advice and StepChange, which can look at the whole budget, not just the mortgage. The single most useful act remains the simplest: find the mortgage deal's end date, put it in the diary, and start the conversation six months ahead of it — before the next Bank decision, on 17 December, has a chance to move the market again.