The Bank of England has increased the Base Rate from 3.75% to 4%, the first increase this year, as policymakers respond to renewed inflationary pressures.

Eight members of the Monetary Policy Committee voted for a 0.25 percentage point increase, while one member wanted a larger 0.50 percentage point rise.

The decision follows a rise in UK inflation to 3.5%, with the Bank now forecasting inflation could reach around 5% by the middle of 2027. Higher global energy prices, largely linked to the continuing conflict in the Middle East, have been identified as a significant factor behind the change in outlook.

What does this mean for mortgage borrowers?

For homeowners on tracker mortgages or some variable rates, the increase could result in higher monthly mortgage payments relatively quickly.

However, fixed mortgage rates do not move directly in line with the Bank of England Base Rate.

Fixed-rate pricing is heavily influenced by financial market expectations and swap rates, which means lenders can increase or reduce mortgage rates before the Bank of England makes its decision.

In fact, mortgage pricing has already become more expensive over recent weeks. The Bank of England says benchmark two-year mortgage rates have risen by nearly 0.50 percentage points since the beginning of September.

Coming to the end of a fixed rate?

If your current mortgage deal is ending during the next six months, this is a good time to review your options rather than simply waiting to see what happens to interest rates.

There may be advantages to securing a new deal early. If rates subsequently improve before your existing mortgage ends, we can review the market again and, where appropriate, move you onto a better option.

At Chetwood Lloyd Mortgages, we compare mortgage options from across the market and provide independent, fee-free mortgage advice.

Whether you are remortgaging, moving home or buying for the first time, getting advice early can give you more time to understand your options.

Need to review your mortgage? Get in touch with Chetwood Lloyd Mortgages for independent, fee-free mortgage advice.