This Thursday, 5 November, the Bank of England announces its latest decision on interest rates. For the first time in a while, the talk isn’t about cuts. Markets are widely expecting the base rate to go up.
If you’re buying a home or your fixed deal is ending soon, it’s natural to feel uneasy. Here’s a look at what’s happening, what it could mean for you, and what you can do now.
What’s expected on Thursday?
The base rate currently sits at 3.75%. According to the news we may see a near-96% chance of a quarter-point rise, which would take it to 4%. At the Bank’s September meeting, three of the nine committee members already voted for an increase.
The main reason is inflation, which has risen to 3.5%. Higher energy prices linked to the conflict in the Middle East are a big part of that. Nothing is certain until Thursday’s announcement, but most commentators expect a rise.
Haven’t mortgage rates already gone up?
In many cases, yes. Fixed mortgage rates are priced from the money markets’ expectations, not just the base rate itself. So lenders have been adjusting for some time.
The Bank of England’s own figures show the average rate on newly drawn mortgages rose to 4.63% in September, up from 4.60% in August. Moneyfacts puts average two- and five-year fixed rates just below 6%. Those averages cover the whole market, and the rate you’re offered will depend on your own circumstances.
That means a rise on Thursday may already be partly reflected in today’s fixed rates. Trackers and standard variable rates, though, usually move soon after a base rate change.
If you’re remortgaging
Many homeowners are already acting. Remortgage approvals jumped to 42,600 in September, up from 34,000 in August, according to Bank of England figures.
If your fixed rate ends in the next six months, a few steps can help:
- Check your end date. Many lenders let you secure a new deal several months before your current one finishes.
- Don’t drift onto your lender’s standard variable rate. It’s often much higher than a new fixed deal.
- Compare a product transfer with the wider market. Staying with your lender can be quick and simple. But it’s worth knowing what else is available, especially if your circumstances have changed.
If you’re buying a home
House prices have cooled. Nationwide reports the average UK price slipped 0.3% in October to £273,566, with annual growth of just 0.5%, the weakest since January 2024. Mortgage approvals for house purchases also fell to 53,400 in September, their lowest since December 2023.
For buyers, a calmer market can mean more room to negotiate. Nationwide’s chief economist Robert Gardner also notes that incomes have kept outpacing house price growth “by a wide margin”. The flip side is that higher borrowing costs can affect how much lenders will offer you. Getting an agreement in principle early gives you a clearer budget before you fall for a property.
What this means if you have adverse credit
If you’ve had CCJs, defaults, missed payments or a debt management plan, rate headlines can feel especially worrying. But there is some encouraging news from the specialist side of the market.
Last week, specialist lender Pepper Money cut rates by up to 1.17 percentage points across ranges for borrowers with a default or CCJ registered in the last 6, 12 or 18 months. Pepper Money’s sales director Paul Adams said: “A recent credit challenge shouldn’t automatically prevent someone from buying a home or remortgaging.”
A few honest points to keep in mind:
- Rates for borrowers with adverse credit are usually higher than standard high-street rates.
- Whether a lender will approve you depends on your individual circumstances, including how recent and how large any credit issues were.
- Lenders look at the full picture. A tidy credit file, stable income and a clear explanation of what happened can all help.
What you can do now
You don’t need to wait for Thursday to start planning. Check your credit file with the main credit reference agencies, correct any mistakes, and gather your recent payslips or accounts. Then speak to an adviser who knows the specialist market.
At Oakmortgages, we work with borrowers with CCJs, defaults, missed payments, debt management plans, IVAs, discharged bankruptcy and complex or self-employed income. We’ll look at your situation honestly and talk you through your options, whether you’re buying or remortgaging. Get in touch for a no-pressure chat.
Your home may be repossessed if you do not keep up repayments on your mortgage. Rates for adverse credit mortgages may be higher, and approval depends on your individual circumstances.
