The rise in one paragraph
The Bank of England raised Bank Rate from 3.75% to 4% on Thursday 5 November 2026, announced at noon. The Monetary Policy Committee voted 8 to 1 in favour, with Catherine Mann the one dissenter, wanting a bigger rise to 4.25%. It is the first Bank of England rate rise since August 2023. The Bank had held at 3.75% at its three previous meetings, on 18 June, 30 July and 17 September 2026. It moved because inflation is too high: CPI inflation was 3.5% in the year to September 2026, against the Bank’s 2% target, and the Bank expects it to peak at around 5% by mid-2027. The next decision is on 17 December 2026. If you are saving for your first home, here is what it means and what to do about it.
Where mortgage rates stand today
Fixed rates were already high before Thursday, because lenders price on what they expect the Bank to do. Moneyfacts put the average two-year fixed rate at 5.97% and the average five-year fixed rate at 5.99% just before the decision, and the average rate on new mortgages at 5.89%, its highest since November 2023. At the start of the year the average two-year fixed rate was 4.83%, so on a £250,000 mortgage over 25 years that adds roughly £170 a month compared with a deal taken out in January.
The best deals are lower, but only with a big deposit. Mortgage Advice Bureau figures updated on 5 November put the best two-year fixed rate at 4.78% and the best five-year fixed rate at 4.78%, both from Halifax at 60% loan-to-value, which means a 40% deposit. The best two-year tracker was 3.99%, also from Halifax at 60% loan-to-value. With a 10% deposit or less, expect a higher rate. The average standard variable rate, the rate you land on if your deal ends and you do nothing, was 7.13% before the decision.
What the rise does to your monthly payment
If you already have a tracker mortgage, your payment will go up within days. As a guide, a 0.25% rise on a £200,000 repayment mortgage over 25 years adds about £29 a month, or about £348 a year. On a £250,000 mortgage over the same term, a 0.25% rise adds about £37 a month.
If you are on a fixed rate, nothing changes until your deal ends. That is the point of fixing. But the rate you will be offered when you remortgage or buy is set by the market now, and the market has already moved. More than 2.3 million households come off fixed deals during 2027. For them, the rate on offer in the next few months matters more than the one they locked in years ago.
Fixed or tracker?
There is no single right answer, and this article is general information, not financial advice. A fixed rate gives you certainty: your payment stays the same for two or five years, whatever the Bank does next. A tracker follows Bank Rate, so your payment moves up or down with it. Right now the average two-year tracker is around 4.68%, below the average two-year fixed rate of 5.97%. That gap is the market betting rates will fall again. If they do, a tracker wins. If the Bank raises rates again, it loses.
Ask three questions. First, could you still pay if your rate went up another 0.5%? If not, certainty matters more than a lower starting rate. Second, how long will you stay? If you may move in two years, a two-year fix or a tracker with no early repayment charge keeps your options open. Third, does the deal charge a fee? A cheap-looking rate with a £1,999 fee can cost more than a slightly higher rate with no fee. Work out the total cost over the deal, not just the headline rate.
Your First Home: what to do before February
The Your First Home scheme does not change because of Thursday’s decision. It is a government equity loan scheme for first-time buyers in England, backed by £4.7 billion over five years. You put down a deposit of between 2.5% and 15%, the government lends you 20% of the price through an equity loan that is interest free for five years, and a normal repayment mortgage covers the rest. Income caps are £110,000 outside London and £140,000 inside London, with price caps of £650,000 in inner London and £500,000 in outer London. Pre-registration opens by the end of December 2026, applications open in February 2027, and the first loans are expected from April 2027.
If you plan to apply in February, the rate picture then matters more than this week’s. Oxford Economics expects Bank Rate to reach 4.25% by February 2027. That is a forecast, not a fact. But run your numbers at 4.25% and at 4.5%, not only at today’s rate, before you decide what you can afford. Do the groundwork now: check your credit file for errors, gather three months of payslips and bank statements, and ask a lender for a decision in principle. It costs nothing, and it tells you roughly what you can borrow.
Five things to do this week
First, if you already have a mortgage, find out when your deal ends and what type it is. If it ends within six months, ask your lender about locking in early; you can often switch to a cheaper deal before it starts if rates fall.
Second, if you are saving for a deposit, check your savings rate: the average easy-access rate was 2.56% before the decision, below inflation of 3.5%, so compare accounts and switch when your provider falls behind. The Cash ISA limit stays at £20,000.
Third, do not drift onto the standard variable rate. Set a reminder for the month your deal ends. On a £250,000 mortgage over 25 years, the average SVR of 7.13% works out at about £1,788 a month, against about £1,606 on the average two-year fixed rate: about £182 a month for doing nothing.
Fourth, build your deposit in the cheapest way you can. Do not borrow to fund one: borrowing gets more expensive when rates rise, and a loan on top of a mortgage makes affordability harder, not easier.
Fifth, speak to a qualified mortgage adviser before you commit. A broker sees deals from across the market, including ones you cannot get direct.
What to watch next
The next decision is on 17 December 2026. Watch inflation and what the Bank says about future moves. If inflation keeps rising, the Bank may raise rates again. If it falls back, fixed rates may ease.
Thursday’s decision will not buy anyone a home or pay anyone’s mortgage. It sets the price of borrowing for the next few months. The people who come out best will be the ones who knew their deal and their date, and acted before the letter arrived.
Please note: this article is general information about an announced decision. It is not financial advice, and it is not a recommendation to borrow, fix or switch. Your circumstances are your own, and a qualified adviser can help you weigh them.
