Bank Rate rises to 4% as BoE weighs looser mortgage income cap

The Bank of England raised Bank Rate by 0.25 percentage points to 4%. Its Monetary Policy Committee (MPC, the nine-member panel that sets Bank Rate) voted at a meeting ending on 4 November 2026. The vote was 8-1, with one member wanting a bigger rise to 4.25%, according to the Bank's November 2026 Monetary Policy Summary, published on Thursday 5 November. That Bank Rate rise lands on top of a second, still-undecided development: a reported plan to loosen the cap on bigger home loans.

What does a 0.25 point Bank Rate rise cost you per month?

Run the numbers on a tracker mortgage (a rate set at a fixed margin above Bank Rate). Take a £150,000 interest-only buy-to-let (BTL) tracker. A 0.25 point rise passed on in full adds £375 a year, or £31.25 a month.

On a fixed rate, your payment stays put until the fix ends. But two-year mortgage pricing has already moved. The MPC minutes record that benchmark two-year mortgage rates had risen by nearly 50 basis points (0.5 percentage points) since the beginning of September.

A stress test checks that the rent covers the mortgage at a higher, notional rate. If you have a refinance coming up, consider running your figures through our free BTL stress test calculator at a few rates above today's.

The same minutes note that new mortgage approvals for households had been falling.

Will Bank Rate keep rising?

The Bank's main reason for this rise is energy. The November Monetary Policy Summary says the conflict in the Middle East is now in its ninth month and global energy prices have continued to rise. It judged the inflationary pressure in the pipeline sufficient to warrant an increase in Bank Rate. Activity data stronger than expected added to the case, it said.

"Monetary policy is not on a pre-set path," the November Monetary Policy Summary states. It adds that UK CPI (consumer prices index) inflation rose to 3.5% in September and is expected to rise to around 5% by the middle of next year.

The individual votes, published in the minutes, point in different directions. Huw Pill wrote that a single 25 basis point hike "is unlikely to be sufficient". Alan Taylor called it a "one-for-now" insurance hike and said the next move could be up, down or sideways. Catherine L Mann was the member who voted for 4.25%.

Markets were already leaning towards more. According to the minutes, the Bank's latest Market Participants Survey put the median expected path for Bank Rate at 4% in November and 4.25% in February. We set out the inflation backdrop in our report on inflation hitting 3.5%.

The next announcement is due on Thursday 17 December, according to the Bank's MPC dates page. If you are weighing a fix against a tracker before then, you may wish to read our guides on mortgages, brokers and finance.

What is the loan-to-income threshold proposal?

The Bank of England is reported to be considering a higher threshold for high loan-to-income (LTI, the size of a mortgage as a multiple of income) lending. The reported plan moves it from 4.5 to five times household income. The Financial Times first reported it, and Estate Agent Today relayed it on 4 November 2026. It is a consideration, not a decision.

Today, loans at or above 4.5 times income count as high-LTI. The Bank's Financial Policy Committee recommends these make up no more than 15% of new residential lending across the market. According to the Bank's high LTI lending page, high-LTI loans were 14.1% of mortgages in scope of the policy in 2026 Q2, or 29,240 loans. That share has risen in every quarter of the Bank's table, from 9.7% in 2025 Q3 to 11.5%, then 12.9%, then 14.1%.

Raising the threshold could free up funds equivalent to 7% of annual new residential mortgage lending, according to the FT's report as relayed by Estate Agent Today. Property Industry Eye adds that loans between 4.5 and five times income would no longer count towards the 15% limit.

Run the numbers on a household earning £60,000. Borrowing 4.5 times income means £270,000. Five times income would mean £300,000, a £30,000 difference. Lenders would still run their own affordability checks, so a higher multiple would not guarantee a bigger loan.

Property Industry Eye states that the Bank has not announced a decision on changing the threshold.

Does the loan-to-income change affect buy-to-let?

Not directly. The Bank's high LTI page defines the mortgages in scope as regulated mortgage contracts, and that definition excludes buy-to-let mortgages.

The rules around the limit already changed this autumn. Under policy statement PS19/26, issued jointly by the Prudential Regulation Authority and the Financial Conduct Authority, the rules that took effect on 28 October 2026 removed the firm-specific 15% cap. The market-wide limit stays.

The knock-on effect would be on the buyers you sell to. Property Industry Eye reports the move could increase the number of buyers able to secure mortgage finance, particularly where prices are high relative to earnings. The same report says UK Finance has argued that loans between 4.5 and five times income have recorded lower arrears than loans below 4.5 times.

So if your exit is a sale to an owner-occupier, this one is worth watching. For your own monthly payment, the Bank Rate rise is the number that bites today.

Key takeaways

• The Bank of England raised Bank Rate by 0.25 percentage points to 4% on an 8-1 vote at the MPC meeting ending on 4 November 2026.

• On a £150,000 interest-only buy-to-let tracker, a 0.25 point rise passed on in full adds £31.25 a month, or £375 a year.

• Benchmark two-year mortgage rates had risen by nearly 50 basis points since the beginning of September, according to the November MPC minutes.

• The Bank is considering raising the high loan-to-income threshold from 4.5 to five times income, as reported by the Financial Times; no decision has been announced.

• The loan-to-income limit covers regulated mortgage contracts, which exclude buy-to-let mortgages, according to the Bank's high LTI lending page.