Interest Rates Rise to 4%: What It Means for Your Mortgage and Savings

If you're on a fixed rate mortgage, as 87% of UK borrowers are, the Bank of England's rise from 3.75% to 4% changes nothing about your payment today. On a tracker, expect roughly £15 a month more for every £100,000 you owe. Savers stand to gain more from switching accounts than from the rise itself.

Last updated: 8 November 2026

What the Bank of England did, and why

On 5 November 2026 the Monetary Policy Committee (the nine people at the Bank of England who set interest rates) voted 8 to 1 to raise Bank Rate by 0.25 percentage points to 4%. Bank Rate, often called the base rate, is the rate the Bank pays on money held with it by commercial banks, and it anchors what lenders charge and pay everyone else. The one dissenter, Catherine Mann, wanted a bigger rise to 4.25%.

It's the first increase since August 2023. The reason is energy. Conflict in the Middle East has kept oil and gas prices high, inflation was 3.5% in September against a 2% target, and the Bank now expects it to reach about 5% by the middle of 2027. Raising rates is its attempt to stop higher energy bills spreading into wages and the price of everything else.

Date	Bank Rate	Change
August 2023	5.25%	Peak of the last cycle
August 2024	5.00%	First cut
August 2025	4.00%	Fifth cut
December 2025	3.75%	Sixth cut, then six holds
November 2026	4.00%	First rise in over three years

Bank Rate is back where it stood in August 2025. Source: Bank of England.

Who pays more straight away

Your mortgage type decides everything. A fixed rate is fixed: the payment stays the same until the deal ends, whatever the Bank does in the meantime. That covers around 87% of outstanding UK mortgages.

A tracker mortgage is set at Bank Rate plus a fixed margin, so it rises by the full 0.25 points, usually from your next payment. UK Finance puts the number of tracker borrowers at about 510,000. Here is what the rise costs on a typical tracker moving from 4.75% to 5%.

Balance owed	Before (4.75%)	After (5.00%)	Extra a month	Extra a year
£100,000	£570	£585	£14	£174
£150,000	£855	£877	£22	£261
£200,000	£1,140	£1,169	£29	£347
£250,000	£1,425	£1,461	£36	£434
£300,000	£1,710	£1,754	£43	£521

Repayment mortgage with 25 years remaining. Monthly figures rounded to the nearest pound. Your own margin and term will shift the numbers slightly; the calculator gives the exact figure.

If you're on your lender's standard variable rate (SVR, the default rate you roll onto when a deal ends), the picture is less certain. Lenders set SVRs themselves and don't have to follow Bank Rate. Around 470,000 households are on one, and if the full rise is passed on, the typical SVR payment goes up by about £14 a month. The bigger problem is the SVR itself, which sits well above most fixed deals.

Try the calculator

Mortgage Repayment Calculator

Enter your balance and term, then run your old rate and your new one side by side to see exactly what the rise adds to your payment.

Open calculator

If your fixed deal ends in the next year

This is where the rise reaches most households, later and indirectly. About 700,000 fixed deals end in the second half of 2026 and another 2.3 million during 2027, according to UK Finance. Each of those borrowers will refinance at whatever rates are on offer at the time.

New fixed rates had already moved before the vote. Lenders price fixes off swap rates (what banks pay to borrow money at a fixed rate for two or five years), and those rose sharply in October as markets bet on higher Bank Rate. After the decision Moneyfacts put the average two year fix at 5.96% and the average five year fix at 5.99%, both slightly lower than the week before. The best deals start at around 4.9%.

Average deal or best buy: the bigger gap

On a £200,000 repayment mortgage over 25 years, the average five year fix at 5.99% costs £1,287 a month. A best buy at 4.9% costs £1,158. That £129 a month difference is more than four times what the base rate rise adds to a tracker of the same size, which makes shopping around the single most valuable thing you can do this winter.

Most lenders let you secure a new deal up to six months before your current one ends, and many will let you switch to a cheaper product before completion if rates fall in the meantime. The timing, the product transfer route and the early repayment charge maths are all covered in Should I Remortgage When My Fixed Rate Ends?, and the Remortgage Calculator compares your current deal against a new one.

What savers gain

A 0.25 point rise adds £25 a year for every £10,000 saved, if your bank passes it on in full. Many won't, or will take weeks. The far larger number is the gap that already existed: the Moneyfacts average easy access rate was 2.53% through the autumn, while the best buy now pays 4.57%.

Savings	Average account (2.53%)	Best buy (4.57%)	The rise alone
£10,000	£253	£457	£25
£20,000	£506	£914	£50
£50,000	£1,265	£2,285	£125

Interest earned over one year, before tax. Easy access rates are variable and can change at any time.

Fixed rate savings bonds pay more again, with one year deals at around 5.1% and five year deals at around 5.4%. If you think rates are near their peak, fixing now locks that in. The Compound Interest Calculator shows what a rate difference is worth once it compounds over several years.

Higher rates bring the tax threshold closer

The Personal Savings Allowance lets basic rate taxpayers earn £1,000 of interest a year tax-free, and higher rate taxpayers £500. At 4.57%, a basic rate taxpayer uses up the allowance with about £21,900 in savings. A higher rate taxpayer reaches it at about £10,900. Money held in a cash ISA doesn't count towards either figure, and the ISA Allowance Calculator tracks how much of this year's £20,000 you've used.

The Scotland angle

Bank Rate is set for the whole UK, and mortgage and savings products are priced the same in Aberdeen as in Bristol. Savings tax is UK-wide too, and it works in Scottish savers' favour. Interest is taxed at UK rates, and the size of your allowance depends on the UK higher rate threshold of £50,270. A Scottish taxpayer on £48,000 pays 42% on the top of their salary but keeps the full £1,000 savings allowance and pays 20% on interest above it. The detail is in Tax on Savings Interest.

If you're buying in Scotland, the rise does nothing to your LBTT (Land and Buildings Transaction Tax, Scotland's version of Stamp Duty), which is charged on the price. It reduces how much you can borrow instead, because lenders stress test your application at a higher rate.

Credit cards, loans and tax bills

Personal loans and car finance. Most are fixed for the full term, so existing repayments don't change. New loans may be priced higher.
Credit cards and overdrafts. Rates are usually 20% to 40% and rarely linked to Bank Rate. A quarter point rise barely registers at that level, though some providers use it as a reason to reprice. A 0% balance transfer saves far more than the rise costs.
Late tax. HMRC charges interest on late payments at Bank Rate plus 4 points. That rises from 7.75% to 8% from 24 November 2026, which matters if you're settling a Self Assessment bill late. The deadlines and penalties are in UK Tax Deadlines 2026/27.

Will rates rise again?

The next decision is on 17 December 2026. Financial markets are pricing Bank Rate at 4.5% to 4.75% during 2027, which is why fixed mortgage rates sit so far above 4% today. The Bank is more cautious. Governor Andrew Bailey said the November rise should not be read as the start of an inevitable sequence of increases, and the committee has set no path in advance.

Two things will decide it: whether energy prices stay high, and whether firms and workers start building higher inflation into prices and pay. If energy eases, the markets may have priced in too many rises and fixed rates could drift down. If it doesn't, trackers will keep climbing a quarter point at a time.

Stress test your own payment

On a tracker or with a deal ending soon, work out your payment at 1 point above today's rate. If that number would stretch your budget, it's a reason to fix sooner or build a cash buffer now. Each further 0.25 point rise on a 25 year repayment mortgage adds roughly £14 to £15 a month per £100,000 owed.

Run your balance at today's rate and at a rate 0.5 or 1 point higher in the Mortgage Repayment Calculator to see what each future rise would cost you.

Frequently asked questions

Will my mortgage payment go up after the rate rise?

Only if your rate is variable. A fixed rate stays exactly where it is until the deal ends, and around 87% of UK mortgages are fixed. Tracker rates move with Bank Rate, usually from the next payment or within a month. Standard variable rates (SVRs) are set by each lender, which can pass on all, part or none of the rise.

How much does a 0.25% rise add to a tracker mortgage?

About £14.50 a month for every £100,000 you owe on a repayment mortgage with 25 years left. That is £29 a month on £200,000 and £36 on £250,000. On interest-only the rise is a flat £20.83 a month per £100,000, because the whole payment is interest.

Will my savings rate go up automatically?

No. Banks are not obliged to pass on a Bank Rate rise to savers, and many easy access accounts lag behind or never move. Fixed rate savings stay at the rate you locked in. The average easy access account paid 2.53% before the rise against 4.57% for the best buy, so switching usually earns far more than the rise itself.

Will interest rates go up again?

The next decision is on 17 December 2026. Markets price Bank Rate reaching 4.5% to 4.75% during 2027, while Governor Andrew Bailey said the November rise should not be read as the start of an inevitable run of increases. The deciding factor is energy prices and whether they feed into wages and wider prices.

Does the rate rise affect Scotland differently?

No. Bank Rate and mortgage pricing are UK-wide, so a borrower in Edinburgh sees the same deals as one in Leeds. Savings interest is taxed at UK rates in Scotland too, so the Personal Savings Allowance works identically. The rise has no effect on LBTT, which is a tax on the purchase price.

Should I fix my mortgage now or wait?

Fixed rates already assume further rises: the average two year fix was 5.96% after the decision, well above Bank Rate. If your deal ends within six months, securing a rate now protects you against further increases, and most lenders let you swap to a cheaper deal before completion if rates fall. Waiting is a bet that the market has priced in too many rises.