Fixed Mortgage Rates Cut Days After the Rise to 4%

Fixed mortgage rates have started to come down in the week after the Bank of England raised Bank Rate to 4%, even as tracker rates go up, and this page explains why both are happening at once. It also covers a Bank of England deputy governor’s view that another rise may be needed, the FCA’s plan to let workplace pensions pay performance fees outside the charge cap, and a change that lets more relatives join a credit union.

Fixed mortgage rates fall while trackers rise

Several big lenders cut fixed rates this week. The Money Pages reported on 12 November that Barclays lowered rates on nearly 50 mortgages on Wednesday, most of them fixed deals, while raising one of its trackers, and that NatWest cut most of its fixed rates by up to 0.2 percentage points on Thursday, with Santander also reducing fixes. The previous week’s Moneyfacts figures, reported by Mortgage Strategy on 6 November, already showed the split: the average tracker rose to 4.73%, while the average two-year fix edged down from 5.97% to 5.96% and the five-year from 6% to 5.99%. Barclays, Accord, Leeds, Virgin Money and Nationwide all raised tracker rates, by up to 0.25 percentage points.

The reason for the split is that fixed rates are priced off swap rates, which already assumed the rise and have since eased, while trackers follow Bank Rate by contract. Moneyfacts puts the cost of a 0.25-point rise at about £37 a month on a £250,000 repayment mortgage over 25 years. If your fix ends in the next six months, most lenders let you secure a new rate in advance and switch to a cheaper one if prices fall before it starts, so checking now costs nothing. If you are on a tracker or standard variable rate and have spare cash, the overpay or invest calculator shows what overpaying is worth at your new rate.

A deputy governor sees a likely case for another rise

Clare Lombardelli, the Bank of England’s deputy governor for monetary policy, said in a speech on 10 November that “in the absence of evidence of weaker inflation pressures, I continue to think there is likely to be a case for a further increase in rates in the near term”, while stressing the judgement is conditional on the data. Her argument is that the labour market is cooling through less hiring rather than more redundancies, so higher unemployment may do less than usual to slow wage growth. Two days later the ONS first estimate for July to September showed the economy grew 0.7% in the quarter, faster than the 0.5% in the quarter before, which is the kind of resilience she described.

One speech is not a decision, and the next decision is due on 17 December. For savers the useful point is that rates may not have peaked, which argues against locking all your cash into a long fix at today’s rates. Keep money you may need soon in easy access; money for five years or more is a different decision, covered in cash ISA or stocks and shares ISA. October’s inflation figure is due on 18 November.

The FCA wants performance fees outside the workplace pension charge cap

The FCA proposed on 12 November that certain performance-linked fees should no longer count towards the 0.75% charge cap on default funds in contract-based workplace pensions, the kind run by insurers and platforms. These fees are common in private equity, venture capital and private credit, and the aim is to let providers invest more in them. Trust-based schemes have had a similar exemption since 2023. The FCA says any higher charges must be justified by extra value to savers, and proposes safeguards on transparency, fair allocation of fees between savers and how private assets are valued. The consultation closes on 14 January 2027, with final rules expected in summer 2027.

If you are in a default fund, nothing changes yet. When it does, the headline charge on your statement may no longer show everything you pay, so it will be worth reading your provider’s annual Independent Governance Committee report as well. Our explainer on fund fees and the OCF shows how much a fraction of a percentage point costs over a working life, and SIPP, workplace pension or ISA covers where your own money sits best.

More relatives will be able to join a credit union

The Treasury said on 11 November that it will change credit union membership rules so that a member who moves out of a credit union’s area can still refer a relative or household member to join. At present you must share a “common bond” with the members, usually living in the area or working for the same employer. The Treasury, citing Bank of England data, says over 50,000 people who cannot refer a relative now would be able to. The change was announced at the second reading of the Financial Services and Markets Bill, so it has no start date yet. Credit unions offer savings accounts and small loans at lower rates than many high street lenders, and savings with a UK credit union are covered by the FSCS in the same way as bank deposits.