Interest rates increase this month - are more to come?

On 5th November 2026, the Bank of England's Monetary Policy Committee (MPC) raised the base rate to 4%. For owner-managed businesses (OMBs) on variable interest rates, their repayments have just increased.  But what about those with fixed rates which might be ending soon, or those planning to borrow in the next 12 months?  How much more they pay will depend more than ever on how lenders see their risk.

This article covers what the Governor said, what the move means for longer-term fixed rates and what you can do now to help your clients get the best rates available.

What the Governor said

Andrew Bailey tried to calm fears of a long run of rises:

"Today's increase shouldn't be seen as the first in an inevitable long sequence of hikes."

He then added a clear warning:

"But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase."

In other words, rates may not climb steeply, but the risk is weighted towards further rises rather than cuts. For your clients, waiting for borrowing to become cheaper is not a reliable plan. To understand what this means for fixed rate borrowing, it helps to look beyond the base rate to swap rates.

What the swap rate has already priced in

Longer term fixed rate business loans are usually priced off swap rates rather than the base rate itself. Swap rates reflect what markets expect interest rates to do over the term of the loan. They move ahead of MPC decisions, not after them. Because of this, much of this month’s rise was probably priced into two year and five year swaps before the announcement. What matters for fixed rate pricing now is whether markets think more rises are coming. 

The Governor's comments suggest the outlook depends heavily on events in the Middle East. If the conflict escalates, swaps could rise further and fixed rates would follow. If it eases, some of the expected rises could unwind. So a client who fixes today, pays for current market expectations, not just today's base rate. That can still be good value if rates keep climbing. But nobody should assume fixed rates will fall soon.

Why credit scores matter more than ever

Lenders build their rates in two parts: the cost of funds and a margin for risk. Your clients cannot control swap rates. They can influence the margin.

A strong business credit score can be the difference between the best rate on offer and an expensive one. It can also decide whether an application is accepted at all. As borrowing costs rise, the gap between those two outcomes gets wider. Lenders look at a trend of credit scores, typically over 3 to 12 months. So even if a client improves their score through Capitalise’s Credit Review Service, a sudden increase may not carry much weight if they apply for funding in the next couple of months. If a client expects to borrow in the next year, now is the time to act.

Practical steps to take now:

1. Check your Monitor dashboard, or review each client's Capital Report to see their current business credit status

2. If a score is lower than you’d expect, encourage them to use the Credit Review Service, so any issues can be identified and addressed early

3. Make sure Companies House filings are up to date and on time, as late filings can lower a credit score

4. Encourage clients to pay all creditors on time, every time, as payment behaviour feeds directly into their score

5. Discourage multiple speculative credit applications before a planned borrowing round, as each one can leave a mark on their credit file

6. Raise funding plans in your next client meeting, rather than waiting until the need becomes urgent

7. Make sure supplier disputes are dealt with promptly, as an unresolved dispute can lead to a County Court Judgment (CCJ), which can seriously damage a credit score

Helping clients borrow well

This rate rise gives proactive advisers a natural reason to talk to clients about what the business wants to do next and how it plans to pay for it. By focusing on credit health now, you’ll help clients secure funding on better terms, whatever the MPC does next.

Through Capitalise, you can give your clients access to their business credit score and funding from over 130 lenders. If you’d like help reviewing your clients’ credit position, please contact your Partnership Manager or email partner.support@capitalise.com.