Base rate rises: what mortgage should you choose now?

The Bank of England's nine-member Monetary Policy Committee (MPC) has voted 8-1 in favour of increasing the base rate by 0.25 percentage points. It is the first time in more than three years that the base rate has risen.  

So how will this decision affect mortgage rates, and did the MPC give any indication of what could happen to the base rate in 2027?

Read on to find out what the decision means for you – whether you're buying a home, remortgaging or trying to get the best return on your savings. 

Why has the Bank of England held the base rate?

You have to go back to 3 August 2023 for the last time the Bank of England increased the base rate. 

At the meeting in November, all nine members of the MPC voted to increase the rate. Eight members opted for a rise of 0.25 percentage points and one voted for an increase of half a percentage point.

The decision was made against the backdrop of conflict in the Middle East, inflation rising to 3.5% in September and both the European Central Bank and US Federal Reserve increasing rates in September.

In its report, the MPC pointed to the risk of conflict in the Middle East being in its ninth month, with it unclear when it may end. At the meeting, Andrew Bailey, Governor of the Bank of England, explained that until conflict in the Middle East is resolved, there is upward pressure on energy prices, which will cause inflation. 

The impact of the war on inflation is shown by projections that it is expected to rise to roughly 5% by mid-2027. Projections of heightened inflation and no clear sign of when the causes of energy inflation will be resolved were the key factors behind the decision to increase the rate to 4%. 

Why are some lenders cutting rates?

Despite the market forecasting a November base rate rise for some time, a selection of big-name lenders have recently cut rates. In the past week, Barclays, Lloyds and Nationwide have all cut fixed rates. Providers can do this because this base rate decision has already been factored into their rates for some time. 

Nicholas Mendes, of broker John Charcol, explains that these cuts are driven by the cost of lenders offering home loans, which has dropped in the past few weeks, as tensions in the Middle East have reduced. In addition, major lenders are battling for customers, with many borrowers coming off fixed rates in the coming months. 

Further rate cuts may materialise as lenders battle for business. Unfortunately for borrowers, it's very unlikely any drastic cut to rates will happen anytime soon. Rate rises could also return if conflict in the Middle East flares up again, which disrupts the global energy markets. 

Here are the best two-year fixed rates for first-time buyers:

• Find out more: best mortgage rates for first-time buyers 

Tracker mortgages still offer the lowest rates

If you're looking for the lowest-possible rate, trackers continue to offer the cheapest deals, currently.

Trackers have the lowest rates because lenders expect the base rate to rise over the next few years. As a result, borrowers need to be comfortable with the possibility that their rate could increase before choosing this type of mortgage. 

David Hollingworth, a mortgage expert from L&C, advises: 'Trackers are therefore better suited to those with some flex in their disposable income. Trackers are more widely available without any early repayment charges, though, so they do at least allow an exit route if rates take another turn and climb steeply.'

For those who have already chosen a tracker mortgage, today's decision means your monthly repayments will rise. For example, a borrower with a £200,000 loan, with 25 years left and at a rate of 4%, will see repayments rise by roughly £28.  

The table shows the best two-year tracker rates for those remortgaging that are available widely:

• Find out more: best mortgage rates for remortgagers

What will happen to the base rate in 2027?

The latest economic forecasts point to the base rate rising in 2027. A volatile international picture means that predictions will likely evolve over the coming months, but currently, it is likely that the base rate will rise again in early 2027.

The latest figures from the Office for Budget Responsibility (OBR) forecast that the base rate could potentially rise three times in 2027, meaning the base rate would be near 5% by the end of next year. 

The shift from a falling to a rising base rate is largely driven by the war in the Middle East, increasing the cost of energy. However, in November, the political environment in the United States of America changed, with the Democrats now controlling the Senate and House of Representatives. 

It will take time to understand the impact of this change, but if it results in a more predictable international picture, this may calm energy markets and result in a lower base rate than currently forecast. 

What does this mean for savers?

It's been a good year to be a saver, with rates continuing to rise. 

If you have savings in an account offering a measly rate, now is the time to switch. All of the best deals in the table offer returns of at least 5%. In fact, more than thirty one-year fixed-rate savings accounts have a rate of at least 5%.

Currently, 70% of savings accounts offer a rate higher than inflation. However, only 41% of variable-rate accounts offer a rate above 3.5%.

If you have a variable-rate savings account, today’s decision means your rate will go up.

Here are the top accounts available right now.

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• Find out more: best savings rates 2026.

When is the next base rate decision?

The next MPC meeting is scheduled for Thursday 17 December. 

The MPC will meet eight times in 2027, with the first meeting on 4 February.

This story is regularly updated after the latest base rate decision, with rate analysis and expert views. The last update was on 5 November 2026.