Interest rates are rising again: what it means for buy-to-let landlords
On 5 November 2026 the Bank of England raised Bank Rate from 3.75% to 4%, its first increase since August 2023. Here is how that feeds through to buy-to-let mortgages and what it means for landlords whose deals are ending.
The Monetary Policy Committee voted 8–1 for the rise, with the one dissenting member wanting a larger increase to 4.25%.
The Bank's stated reason is energy. Conflict in the Middle East has kept energy prices high and volatile. Inflation stood at 3.5% in the latest figures, and the Bank expects it to reach around 5% by mid-2027. Raising Bank Rate is intended to stop higher energy costs feeding into prices across the wider economy.
For landlords, the rise comes on top of a year of climbing mortgage costs. Moneyfacts data shows average buy-to-let fixed rates moved from the 4% range into the 5% range after late February 2026. Three-year fixes rose the most, from 4.16% to 5.54%. The next Bank Rate decision is due on 17 December 2026.
How Bank Rate feeds through to buy-to-let mortgages
Bank Rate is the rate the Bank of England pays banks on money they hold with it. When it rises, lenders usually raise what they charge on loans. But different types of mortgage respond in different ways and at different speeds.
| Mortgage type | What happens when Bank Rate rises |
|---|---|
| Tracker | The rate moves with Bank Rate, in line with the mortgage terms. Some lenders apply the change within a couple of weeks. |
| Fixed rate (existing) | The payment stays the same until the fixed period ends. |
| Fixed rate (new deals) | Priced mainly from wholesale "swap" rates, which reflect where markets expect rates to go. These often move before the Bank does. |
| Lender's variable rate (SVR or revert rate) | Set by each lender. It often rises after a Bank Rate increase, but the lender decides. |
This is why fixed rates climbed sharply in spring and again in September and October 2026, before Bank Rate itself moved. Markets had already priced in a rise. In the week of the November decision, some lenders even trimmed selected fixed rates while raising their trackers.
No one knows where rates go next. The Bank's Governor said the November rise should not be read as the start of an inevitable long run of increases, but suggested it was unlikely to be the last unless the Middle East conflict is resolved. Which? reports that the Office for Budget Responsibility expects Bank Rate to rise towards 5% over the next 12 months and stay above 4% until at least 2031. Forecasts like these change often, sometimes within weeks.
Why higher rates can reduce what a landlord can borrow
Buy-to-let lenders mainly assess affordability on rent, not salary. They check that the rent covers the mortgage interest by a set margin, called the interest cover ratio (ICR). The interest is worked out at a "stress" rate that is usually higher than the rate actually charged.
Rules from the Prudential Regulation Authority, in force since 2017, require the lenders it regulates to assume a minimum rate of 5.5% for the first five years and to allow for rates rising. Loans fixed for five years or more are treated differently and can be tested nearer the actual rate.
Typical lender settings look like this, though each lender sets its own:
- 125% ICR for limited companies and basic-rate taxpayers
- 145% ICR for higher-rate taxpayers borrowing personally, with some lenders asking for 160%
- Higher ICRs for HMOs and multi-unit properties at some lenders
- Stress rates commonly between 5.5% and 8%, with shorter fixes and trackers tested at the higher end
When product rates rise, lenders' stress rates often rise with them. The same rent then supports a smaller loan. Here is an illustration for a property let at £1,000 a month, tested at 125% ICR:
| Stress rate used | Largest interest-only loan the rent supports |
|---|---|
| 5.5% | £174,545 |
| 7.0% | £137,143 |
| 8.0% | £120,000 |
The figures are illustrative and ignore fees, other income and individual lender rules. You can try your own figures in our rental cover calculator.
On average, landlords still have headroom. UK Finance put average interest cover on new buy-to-let loans at 217% in the second quarter of 2026, down from 221% the quarter before. Averages hide tight cases, though, particularly in lower-yield areas such as London, where the average gross yield on new lending was 6.14%.
Fixed or tracker: how each behaves when rates move
Fixed and tracker mortgages respond to Bank Rate in opposite ways. Neither is automatically better; each suits different plans and appetites for change.
| Fixed rate | Tracker | |
|---|---|---|
| Payment during the deal | Set for the fixed period | Moves with Bank Rate |
| If Bank Rate rises | No change until the fix ends | Payment goes up |
| If Bank Rate falls | No change until the fix ends | Payment goes down |
| Early repayment charges | Common during the fixed period | Vary; some trackers have low or none |
| Lender's rental test | Fixes of five years or more can be tested nearer the actual rate | Usually tested at a higher stress rate |
On a tracker, each 0.25 percentage point change in Bank Rate moves the interest on a £200,000 interest-only loan by about £42 a month, or £500 a year.
In buy-to-let, the lowest headline rates are often on two-year fixes, but many of those carry large arrangement fees. Which? found the cheapest two-year fixes in early November 2026 charged fees of 5% of the loan. That is £10,000 on a £200,000 mortgage. Comparing the total cost over the deal, not just the rate, gives a truer picture.
What landlords commonly weigh when a deal is ending
The biggest impact of higher rates falls on landlords whose deals are ending. UK Finance links the rise in remortgaging to large numbers of fixed-rate deals expiring. Many are five-year fixes taken out in 2021, when rates were far lower.
An illustration on a £200,000 interest-only buy-to-let mortgage:
| Rate | Monthly interest |
|---|---|
| 2.50% (typical of many 2021 fixes) | £417 |
| 4.82% (UK Finance average on new buy-to-let loans, Q2 2026) | £803 |
| 5.79% (average fixed buy-to-let rate, start of October 2026) | £965 |
Figures are illustrative and exclude fees.
Points landlords commonly look at when a deal is ending:
- Timing. Many lenders hold remortgage offers for around six months, so a new rate can be arranged before the current deal ends rather than after. See our guide to when to think about a buy-to-let remortgage.
- The revert rate. Moving onto the lender's variable rate can cost much more. Revert rates on some of the cheapest current deals range from 6.45% to 8.74%.
- Product transfer or remortgage. Staying with the current lender is usually quicker and often avoids a new rental test. Moving lender gives access to more deals and the option to raise money. See how long a buy-to-let remortgage takes.
- The rental test. A new lender re-tests the rent at today's stress rates, which may limit the loan available.
- Total cost, not just the rate. Fees vary widely. Which? found only around 14% of buy-to-let deals are fee-free.
- Tax changes. Higher tax on rental profits from April 2027 will affect net returns for landlords who own property personally. See how the buy-to-let market is changing.
Talk to a buy-to-let broker
Tell us a little about your property and when your current rate ends, and we will put you in touch with a buy-to-let broker who can compare the options. Free, no obligation, no credit check.
Important information. This article is general information about the UK buy-to-let market, written as at 7 November 2026. It is not financial, tax or legal advice and is not a recommendation of any product or course of action. Rates, rules and tax positions change, and circumstances differ. Buy to Let Remortgages does not give advice or arrange mortgages. We pass enquiries to a buy-to-let mortgage broker. Most buy-to-let mortgages are not regulated by the Financial Conduct Authority. All lending is subject to the lender's criteria, valuation and underwriting. Your property may be repossessed if you do not keep up repayments on your mortgage.
Sources
- Bank of England: Interest rates and Bank Rate, latest decision (5 November 2026)
- Mortgage Solutions: Landlords warned 'no reason to assume' end of rising costs as base rate hits 4% (5 November 2026)
- Which?: What's happening to buy-to-let mortgage rates? (4 November 2026)
- UK Finance: Buy-to-let update Q2 2026, as reported by Property Front Page (22 October 2026)
- NRLA: Rental stress test buy-to-let mortgage guide (7 July 2026)
Common questions
Will my buy-to-let mortgage payment go up straight away?
Only if it is a tracker or on the lender's variable rate. Fixed-rate payments stay the same until the fixed period ends.
Will interest rates rise again?
No one can say for certain. The next Bank Rate decision is on 17 December 2026, and the Bank says it will judge the outlook at each meeting. Current forecasts point to rates staying above 4% for some time, but forecasts change often.
Can higher rates reduce how much I can borrow?
They can. Lenders test rent against a stress rate, and when that rate rises the same rent supports a smaller loan.
Is it better to fix or track?
That depends on individual circumstances, plans for the property and how much payment change a landlord is comfortable with. This article cannot say which suits you; a broker can compare the options for a specific case.
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