Interest rates rise to 4%, what it means for you

On Thursday 5 November 2026, the Bank of England raised its main interest rate, called Bank Rate, from 3.75% to 4%. It is the first rise in over three years.

The Bank said it raised rates because prices are rising faster than it wants. It warned that inflation could get close to 5%, partly because of higher energy costs.

For many people, a quarter of a percent may not sound like much. But if money is already tight, any extra cost matters. This guide explains what could change, what will not, and where to get help.

What is Bank Rate?

Bank Rate is the interest rate the Bank of England sets. It affects the rates banks and lenders charge when you borrow, and the rates they pay when you save.

When prices rise quickly, the Bank may raise Bank Rate to try to slow that down. The aim is to bring inflation back down over time. But in the short term, it can make borrowing more expensive.

Will it affect my benefits?

No. Disability and health benefits, such as PIP, DLA, Attendance Allowance, ESA, Carer's Allowance and Universal Credit, are not linked to Bank Rate. The rise does not reduce them.

Most benefits usually go up each April in line with inflation. Higher inflation now could mean a bigger rise next April, but the April 2027 rates have not been confirmed yet. Read the Autumn Budget 2026 and disabled people for the latest on benefit rates.

The bigger worry for many people is not their income, but what they pay out.

Everyday shopping and bills

The rate rise is meant to slow down price rises over time. It does not make things cheaper overnight, and it takes many months to have its full effect. In the meantime, the Bank expects prices to keep rising, with inflation getting close to 5%.

That means the cost of everyday things, such as:

• food and groceries
• energy for heating, cooking and powering equipment
• toiletries, cleaning products and household basics
• travel, such as fuel, bus and train fares

is likely to keep going up for a while. Inflation going down does not mean prices fall. It means they rise more slowly.

How higher interest rates feed into prices

• Businesses borrow too. Shops, suppliers and landlords who pay more on their own loans may pass some of that cost on to customers.
• Spending on credit costs more. If you use a credit card, overdraft or buy now, pay later for everyday shopping, the same basket of food can end up costing you more once interest is added.
• Less money left over. If your mortgage or loan payments go up, there is less left each month for food, energy and other essentials.

Ways to make everyday money go further

• Make a simple budget. List what comes in and what must go out first: rent or mortgage, energy, council tax and food. Free budgeting tools from Citizens Advice and StepChange can help.
• Pay for essentials first, before anything that can wait.
• Avoid using credit for food and bills if you can. If you have to, it is a sign to get free debt advice.
• Check every discount you can get on bills, health costs and travel. See money off bills, help with NHS health costs and travel help.
• Ask about emergency help if you cannot afford food or energy. Your council can tell you what is available locally, including food banks and the funds listed below.

Mortgages

• Tracker and variable rate mortgages usually go up quickly, often from your next monthly payment. Your lender should write to you.
• Fixed rate mortgages do not change until your fixed deal ends. If your deal ends soon, start looking at new deals early, as rates may be higher than before.

If you get benefits and own your home

Universal Credit does not include help with mortgage payments in the same way it helps with rent. You may be able to get Support for Mortgage Interest (SMI). It is a loan, not a grant, and it is paid back when you sell your home or move. Check GOV.UK, and get free advice before you agree to it.

Rent

The rate rise does not directly change your rent. Your landlord cannot put the rent up just because interest rates have risen. Some landlords may try to pass on their own higher costs over time, but rent increases must follow your tenancy agreement and the law.

If your rent goes up and you get Universal Credit or Housing Benefit, tell the DWP or your council straight away, as your help with housing costs may change. If there is a gap between your rent and your housing support, you can ask your council for a Discretionary Housing Payment.

Loans, credit cards and overdrafts

• Credit cards, overdrafts and some loans may become more expensive, especially those with variable rates.
• Fixed rate loans usually stay the same until they end.
• Be very careful with buy now, pay later and high-cost credit. They can quickly add up when money is tight.

If you are using credit to pay for essentials such as food, energy or rent, it is a sign to get free debt advice now.

Savings

Banks may slowly raise the interest they pay on savings. If you have savings, it can be worth checking whether you could get a better rate.

Savings and Universal Credit

If you get Universal Credit, your savings can affect your payment:

• Under £6,000: your savings do not affect Universal Credit
• £6,000 to £16,000: Universal Credit counts some assumed income from your savings, which reduces your payment
• Over £16,000: you usually cannot get Universal Credit

For couples, both partners' savings are added together. Other benefits, such as PIP, DLA, Attendance Allowance and New Style ESA, are not affected by your savings.

Why this hits disabled people harder

Many disabled people and people with long-term conditions already face higher everyday costs, such as heating, equipment, transport and special diets. When prices and borrowing costs rise together, there is less room in the budget for anything extra.

That is why it matters to claim everything you are entitled to, and to get help early.

What you can do now

1. Check you are getting every benefit you can. Many people miss out. Try our free PIP self-check and NHS health costs check.
2. Cut your bills where you can. See money off bills, including council tax discounts, energy and water help and phone and broadband social tariffs.
3. Check your mortgage or loan. Find out if your rate is fixed or variable, and when any fixed deal ends.
4. Ask for emergency help if you need it. In England, your council may help through the Crisis and Resilience Fund. In Wales, you can apply to the Discretionary Assistance Fund.
5. Get free debt advice early. Free, confidential help is available from StepChange, Citizens Advice and National Debtline. They will never judge you.