Bank of England weighs rate rise to 4% as mortgages buckle

The Bank of England is widely expected to raise interest rates to 4% from 3.75% on Thursday November 5, which would be the first increase since August 2023. The Monetary Policy Committee has held rates at 3.75% since December 2025, but three of its nine members — Huw Pill, Megan Greene and Catherine Mann — have voted to hike to 4% at recent meetings.

The case for a hike rests on inflation that has proved stickier than expected. CPI inflation rose to 3.5% in September 2026, the highest in 11 months, after Ofgem's energy price cap rose 3.6% for a typical household on October 1. Oil prices have risen above $100 a barrel amid renewed hostilities in the Middle East, adding to energy costs. Goldman Sachs revised its forecast to expect a 25-basis-point increase in November 2026, citing higher wholesale energy prices, stronger-than-expected inflation, and continued economic growth.

What makes the decision more than a simple rates-go-up story is the state of the mortgage market. Low-deposit deals favoured by first-time buyers have already been hit, with more withdrawn in a single day than at any time since the 2022 mini-Budget. First-time buyers now face average interest rates of more than 6% on two-year mortgages when they can only offer a 5% deposit. A hike would raise borrowing costs further for households and businesses, particularly mortgage holders.

The decision also tests whether the Bank can prevent energy-driven inflation from becoming persistent.

For now, the evidence points to a hike that is widely expected but not yet delivered. The committee has not voted, and the outcome remains uncertain until Thursday.