UK households face mortgage jumps after rate hike

Before the decision, more than 2.3 million UK households were expected to face higher mortgage payments in 2027 as fixed deals ended. Inflation had risen to 3.5% in September, and the Bank of England was widely expected to raise the base rate from 3.75% to 4% on 5 November. The OBR warned household disposable incomes would fall 0.6% next year, while mortgage approvals fell to a near three-year low in September.

On 5 November, the Bank of England raised its benchmark rate by 25 basis points to 4%, the first increase since August 2023, after an 8 to 1 vote. Policymakers warned inflation could reach about 5% by the middle of 2027 as Middle East energy prices stay elevated. The move should raise borrowing costs and savings rates, with two-year mortgage rates already up nearly half a point since September.