Homeowners face prospect of another increase in borrowing costs if BoE raise the base rate
The Bank of England is expected to hike interest rates for the first time in more than three years, economists have said, as mortgage holders face a further squeeze.
Rate-setters are widely expected to tighten monetary policy in a bid to tackle rising inflation in the UK economy.
Traders in the financial markets are predicting that rates will increase to 4 per cent from 3.75 per cent when the Bank’s Monetary Policy Committee (MPC) announces its decision today.
This would be the first time that the central bank increases borrowing costs since August 2023.
The conflict in the Middle East has helped push CPI further away from the Bank’s two per cent target rate, with a surge in petrol and diesel prices a major driving force.
And inflation is expected to be pushed higher this winter after Ofgem’s energy price cap rose by 3.6 per cent for a typical household on October 1 and is forecast to jump by a further 22 per cent in January.
UK's midcap index at record high ahead of Bank of England rate call
Britain's midcap FTSE 250 index hit a record high and the blue-chip FTSE 100 rose to a near three-month peak on Thursday, boosted by bank stocks ahead of the Bank of England's policy decision.
The FTSE 100 index (.FTSE), opens new tab rose 0.5% to 10,888.64 points by 1034 GMT, while the FTSE 250 (.FTMC), opens new tab climbed 0.6% to its all-time high.
It comes as the Bank of England is widely expected to deliver a 25-basis-point hike later today, its first rate increase in three years, as inflation pressures linked to the US-Israeli war on Iran mount
Maryam Zakir-Hussain5 November 2026 11:53Ben Nichols, CEO of RAW Capital Partnershas said there will not be be a direct and immediate reaction on mortgage rates from a hike today.
“This was widely expected. Inflation is creeping ever higher, driven largely by energy prices and the conflict in the Middle East, and there is still some volatility in the bond market, so the Bank had to act. But there is no need to blow this base rate hike out of proportion; lenders priced this in many weeks ago, so today's decision will not necessarily translate into any further upward movement in fixed-term rates.
"More positively, the longer-term economic outlook seems to have improved slightly, and with the Budget having come and gone, there is a little more stability across the property and mortgage markets. This ought to provide greater certainty, allowing borrowers to move ahead with a little more confidence. As lenders, we have to be ready to respond in kind, supporting brokers and borrowers through pragmatism, flexibility and, when necessary, speed."
Maryam Zakir-Hussain5 November 2026 11:44Expert analysis from our Business and Money Editor
Another vote to hold would be nothing short of shocking today, so beyond the actual lifting of the Bank Rate to four per cent, there are a few things we need to watch out for.
Firstly will be the vote numbers.
Analysts have been split over the past few weeks, on whether we'd get a 6-3 or a 7-2 - but more seem to be leaning towards the latter.
The tone around the votes, the reasons laid out by the MPC members, will be just as key: it won't just be about why they are raising them today, but about the risks they see in the coming months regarding inflation and the wider economy.
Today's outcome won't just shape a hiked base rate, it will also impact the pound and the bond markets.
Karl Matchett5 November 2026 11:17Millions in UK set for higher mortgage costs next year as interest rate rise imminent
Households in Britain are bracing themselves as the Bank of England is looking set to raise interest rates - and it will mean millions of households face higher mortgage costs next year.
The Monetary Policy Committee (MPC) meet to vote on Thursday, with analysts widely set on expecting a hike from 3.75 per cent to 4 per cent - the first time the Bank would have raised rates in more than three years.
And with 2.3m households in the UK set for a mortgage renewal across the course of 2027 - nearly half a million homes more than did so this year - it will mean a particularly big jump for those who secured five-year fixes in the first half of 2022, just as interest rates started to run higher in the wake of Russia’s invasion of Ukraine.
Millions in UK set for higher mortgage costs next year as interest rate rise imminent
The next Bank of England vote takes place on Thursday 5 NovemberMaryam Zakir-Hussain5 November 2026 10:45What will the rates hike mean for homeowners?
Jinesh Vohra, chief executive officer of free mortgage app Sprive, said: “With the Bank of England widely expected to raise the base rate, homeowners face the prospect of another increase in borrowing costs at a time when household budgets are already under pressure. This will be particularly unwelcome for the millions facing the end of a fixed-rate deal over the coming year, who could find themselves refinancing onto significantly more expensive mortgages.
“While lenders are competing hard for business, homeowners shouldn’t assume that competition alone will protect them from higher mortgage costs. Those coming to the end of a fixed deal need to start reviewing their options early, rather than leaving it until the last minute and risking being pushed onto a more expensive rate.
“It’s also a reminder that homeowners need to look at what they can control. Overpaying, even by relatively small amounts, can reduce the outstanding mortgage balance and the interest paid over the life of the loan. For households already feeling the squeeze, finding extra money each month isn’t always realistic. That’s why using cashback from everyday shopping to make additional mortgage payments can be a useful way to chip away at the balance without putting further pressure on monthly budgets.
“Homeowners can’t control the Bank of England’s decisions or where mortgage rates go next, but they can take steps to make their mortgage more manageable. The sooner they start, the more they could save over time.”
Maryam Zakir-Hussain5 November 2026 10:27November rate hike looks like a 'done deal,' economist says
Alexander Harvey, UK economist for Oxford Economics, said a November rate hike looks to be a “done deal” for the committee, which will be responding to higher oil and gas prices.
“So far, two factors have been central to the MPC’s decision-making since the outbreak of the conflict in the Middle East: the scale and duration of the energy price shock, plus the extent of any second-round inflation effects from elevated energy prices,” he said.
“These factors will continue to dominate the outlook for Bank rate.”
He said the key thing economists will be looking out for is any signal from the Bank as to where interest rates could go from here, with the financial markets expecting further hikes into 2027.
Maryam Zakir-Hussain5 November 2026 10:20What could happen if BoE increases interest rates?
Commenting on the expected interest rates hike, Ellie Henderson, an analyst for Investec, said: “We imagine that many committee members’ patience with the recent rise in inflation has worn thin.
“The longer energy prices remain elevated, the greater the risk that a temporary price shock becomes more permanent; a ‘risk management’ hike could guard against this.”
She cautioned that producers might “not be willing or able to shoulder the burden of higher energy prices for much longer” and that this could push up prices in shops.
Maryam Zakir-Hussain5 November 2026 10:18Pound hits post-Brexit high ahead of BoE interest rates decision
The Bank of England is expected to hike interest rates for the first time in more than three years, economists have said, as mortgage holders face a further squeeze.
Rate-setters are widely expected to tighten monetary policy in a bid to tackle rising inflation in the UK economy.
Traders in the financial markets are predicting that rates will increase to 4 per cent from 3.75 per cent when the Bank’s Monetary Policy Committee (MPC) announces its decision today.
This would be the first time that the central bank increases borrowing costs since August 2023.
Maryam Zakir-Hussain5 November 2026 10:16
