Interest rates expected to rise for first time in over three years
Summary
The Bank of England is expected to raise its benchmark interest rate from 3.75% to 4% on Thursday, which would be its first increase since August 2023. The expected rise comes as inflation climbs, while it could increase borrowing costs for some households and businesses and improve returns for savers.Key Facts
- The Bank of England has held its rate steady at its last six meetings.
- UK consumer price inflation was 3.5% in the year to September 2026, up from 3.1% in August and above the Bank’s 2% target.
- The article links rising inflation mainly to higher petrol and diesel costs, with energy and fuel costs affected by the Iran war.
- A rate increase would immediately affect about 510,000 tracker mortgage holders; a quarter-point rise is estimated to add £31 a month to a typical tracker loan repayment.
- About 470,000 people with variable-rate mortgages could see payments rise depending on their lender’s response; a quarter-point increase would typically add £14 a month.
- Fixed-rate mortgage payments would not change immediately, but lenders have already factored the expected increase into some new deals.
- On 4 November, average two-year and five-year fixed residential mortgage rates were 5.96% and 5.99%, respectively.
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