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The Bank of England’s Monetary Policy Committee (MPC) voted by 8-1 to raise the base rate to 4% in November, with one member wanting to raise rates to 4.25% amid concerns that we could see inflation jump higher.
The Consumer Prices Index measure of inflation rose to 3.5% in the year to September, up from 3.1% in August, and steeper energy bills in coming months are expected to push inflation higher.
It is the first time in more than three years that the MPC has voted in favour of increasing the base rate.
Early this year, markets were pricing in two rate cuts in 2026 but due to the Middle East conflict which saw fuel prices jump, rates aren’t expected to come down any time soon.
Isabel Albarran, Investment Officer at TrinityBridge said: “Today’s 25bps hike reflects an economy that has taken the punches surprisingly well this year. Higher energy prices have pushed up inflation and bond yields, yet growth, consumer spending and the labour market have remained resilient. The economy has given the Bank both a reason to hike and the room to do it.”
“The bigger question is what comes next. If energy prices fall back before February, today’s move could be ‘one and done’. But if the conflict with Iran keeps oil prices elevated into 2027, the case for a second hike will become much harder to ignore.”
Here, we explain what November’s rate rise might mean for you and your finances.
Your savings
Savings rates are currently competitive, and while variable savings rates may tick up following the base rate rise, fixed savings rates aren’t expected to increase dramatically.
Katie Horne, savings expert at Flagstone, explained: “Banks have been building an anticipated hike into the rates they offer on fixed term savings accounts for several months now, which explains why the average 1-year fixed term rate has risen seven months in a row. A single 0.25% base rate increase isn’t expected to move fixed rates much further.
“However, average instant access savings rates have barely moved since July, and we can expect variable rates to reprice first when the interest rate environment shifts.
“Today’s leading rates may not lead for long. With lots of repricing expected around the decision, best buy rankings will shift quickly. This means that any base rate change serves as a handy reminder to all savers that ‘setting and forgetting’ their savings doesn’t yield the best results. Instead, savvy savers will review their accounts regularly to ensure they’re getting the best value from their cash as market mood and rates move.”
You can find the current best fixed savings rates in our article Where can I find the best fixed savings accounts? and the best cash ISA rates in our guide Best cash ISA rates – which cash ISAs pay the most interest?
Those with longer-term savings goals – more than five years and preferably at least 10 – and who are comfortable accepting a level of risk, may want to consider investing some of their money in the hope of generating inflation-beating returns. However, remember that there’s a chance you could get back less than you put in, so investing isn’t for the faint-hearted, especially given current volatility.
Find out more about whether investing some of your savings could be right for you in our guide Investing – the basics.
What you can do
It’s essential to make sure your savings are working as hard as they possibly can for you, as often banks lure savers in with tempting rates only to reduce them a few months later.
Check savings websites such as Moneyfactscompare.co.uk or Raisin, or price comparison sites such as uSwitch or GoCompare to see if you can find a higher interest-paying account to move to.
If you have money in a fixed rate savings account and you think you could do better elsewhere, check what the penalties are for closing your account. In some cases, it may just be a few months’ interest, and you may be better off moving your money to an account paying higher returns.
Your pension
If you’re approaching retirement and considering using some or all of your pension savings to buy an annuity to provide you with an income, the rate rise is positive, as when rates are higher, this usually means you’ll get more for your money than previously.
Sarah Coles, head of personal finance at AJ Bell, said: “Anyone currently shopping around for an annuity could see rates rise on the back of a Bank Rate hike, which would improve the income for life they can take from their pension.
“Some people consider buying an annuity with some of their pension pot, alongside using income drawdown with the rest of it, so they can combine guaranteed income with flexibility and potential growth. For these people, now could be a good time to shop around for a generous annuity rate.”
Find out more in our articles Annuity incomes reach record high – is now the time to buy?, Annuities explained and Why it pays to shop around for your annuity.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
Your mortgage
The Bank’s decision to raise the base rate to 4% will come as a blow to homeowners, many of whom are already facing a sharp jump in their monthly payments when their fixed rate deals come to an end.
Jason Hollands, Managing Director of online investment platform Bestinvest, said: “In the current environment, it is advisable for mortgage borrowers who have a refinancing on the horizon to actively seek the lowest rates sooner rather than later, as it is usually possible to lock into a product months before a loan expires and still swap if a better deal emerges.”
If your current mortgage deal is finishing soon, you can find out about remortgaging in our article Five good reasons to remortgage now. Learn why mortgage rates move even when the base rate has stayed the same in our guide What are swap rates and how do they affect my mortgage
What you can do
If you’re on a standard variable rate (SVR), you should remortgage to a cheaper deal if possible, as SVRs are usually the most expensive mortgage rates. You might also want to start looking around for a new deal now if your current mortgage deal is due to end in the next few months, as you can usually secure your next mortgage three to six months before you want it to begin.
Ms Coles said: “If you have a remortgage on the horizon – within the next six months – it’s worth locking in a deal now. If rates rise as expected in the interim, you will have secured a relatively affordable mortgage, and if they don’t, you can shop around again closer to the time.”
If you’re planning to remortgage and are looking for a place to start, we have a mortgage affordability calculator, which will give you a rough estimate of what you might be able to afford, based on current market conditions.
Once you have a rough estimate, it can be helpful to compare different mortgage options to understand what your monthly repayments are likely to be.
Unless your situation is very straightforward, you may want to seek professional advice from a broker to find the best mortgage option for you. The advantage is that they will know which banks and building societies are more likely to accept your application. It’s definitely worthwhile if you are self-employed (unless you have been so for years) or your credit rating isn’t excellent.
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Want to speak to a mortgage adviser? Speaking to an experienced adviser can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 2,600 reviews.
If you’re finding it hard to keep up with your mortgage repayments, please don’t suffer in silence. Our article What can you do if you can’t pay your mortgage? explains what to do if you’re struggling with higher costs.
Your credit card and loans
Borrowing costs are likely to increase due to the base rate rise, and with an uncertain economic outlook, it remains important not to take on more debt if you can possibly avoid it.
If you have expensive short-term debts, it’s worth considering paying them down, and if you don’t have an emergency savings safety net to cover 3-6 months’ worth of essential expenses, it’s worth beefing them up if you can afford to do so.
What you can do
If you’re paying a high rate of interest on your credit card borrowing, try and get a 0% balance transfer credit card deal, so that you can pay off what you owe without being hit by hefty interest charges. Remember though that you must try and clear your balance in full before the introductory 0% period ends, or you’ll start being charged interest.
If you can’t get one, you have the right to reject the interest rate rise within 60 days and close your credit card account. The credit card company must then give you a reasonable time to pay off the money you owe.
If you’re worried that you won’t qualify for a 0% credit card deal, there are several credit checker and credit matcher tools available – and some credit card companies will also give you an indication of whether you’d be successful before you apply.
If you have a loan which you want to pay off quickly, lenders must allow you to do this, although you may be charged an early repayment penalty to do so. Lenders can charge you up to two months extra interest if you choose to pay back your loan sooner than planned. If your loan has less than 12 months left to run, they can only charge you a penalty of up to one month’s interest if you pay it off early.
Sarah Pennells, Consumer Finance Specialist at Royal London, said: “For anyone worried about their finances, now is a good time to take stock of regular outgoings and prioritise building a financial buffer where possible. If you’re worried about your mortgage or debt payments or are struggling, speak to your lender as soon as you can rather than waiting until you miss a payment. The earlier you ask for help, the more options may be available.”
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