The Bank of England raised Bank Rate from 3.75% to 4.00% at noon on Thursday 5 November 2026, its first interest rate rise since August 2023. The Monetary Policy Committee voted 8-1 for the quarter-point increase, after holding the rate steady at its last six meetings.

The dissent came from an unexpected direction. Catherine Mann voted for a bigger half-point rise to 4.25%, citing concern about non-linear inflation risks. No member voted to hold the rate unchanged.

Inflation expected to peak near 5%

Consumer price inflation reached 3.5% in September, up from 3.1% in August, and the Bank expects it to peak at around 4.8% in the second quarter of 2027. Its headline guidance put inflation at around 5% by the middle of next year, driven largely by energy prices. The Bank revised growth forecasts up to 1.6% this year and 1.3% next year.

The Bank also warned that at least one more rise was likely if the US-Iran conflict continues. In an adverse scenario in which oil reaches around $130 a barrel, it said inflation could hit 6.2% in the third quarter of 2027. Sterling stood at $1.3477, two-year gilt yields rose 2-4 basis points, and the FTSE 100 closed 0.7% higher. The next rate decision is on 17 December.

What it means for mortgage holders

Tracker mortgage holders face an immediate rise. UK Finance calculated that a quarter-point increase adds about £31 a month to a typical tracker mortgage, and around 510,000 households hold tracker deals. A further 470,000 households are on standard variable rates, where lenders decide whether to pass the rise on. Fixed-rate borrowers see no change during their current deal, but average new mortgage rates have already reached 5.89%, according to Moneyfacts.

Sources: Reuters, Bank of England raises rates for first time since 2023, says more may come, 5 November 2026; Bank of England, Monetary Policy Report, November 2026; UK Finance via British Bulletin, 5 November 2026; Moneyfacts via Today's Conveyancer, 5 November 2026.