Bank of England Base rate: all you need to know

You have more than likely heard the term ‘base rate’ banded around in the news over the last  few months, but what does it actually mean? Why does one rate have such an impact on so  many mortgage products nationwide and why has the base rate risen? We take a look at all  you need to know about the base rate and how it can affect you.

 The Bank of England base rate is  the interest rate set by the UK’s  central bank, meaning that it is  the interest rate that high street  banks and other lenders are  charged to borrow money. This  subsequently has a direct impact  on how much consumers and  businesses pay for taking out  loans or receive for depositing  cash into savings accounts. 

 The bank base rate is often  determined by the state of the  economy. The Bank of England’s  Monetary Policy Committee  (MPC) meets on a regular basis  to agree on what rate to set  roughly every 6 weeks. The  MPC decide on the base rate in  order to help maintain affordable  prices, keep companies afloat  and maintain a good level of job  retention. Following the pandemic, many  industries have experienced  shortages in materials and goods.  This causes businesses to raise  their prices – meaning everyday  items increase in price. This is  called inflation – and the MPC’s  job is to try and keep inflation  at around 2%. With the current  rate of inflation above 5%, the  base rate is now being risen in a  bid to slow inflation as it offers  more benefits when it comes  to saving money and therefore  discourages consumers to  spend as much – slowly helping  to remedy supply issues by  reducing demand.  

How does it impact you?

The base rate is the main factor  behind what high street lenders  charge their customers for most  loans such as credit cards and  mortgages, so you can expect  any non-fixed repayments to  rise with the base rate. However,  nearly three quarters of the  UK’s population have fixed rate  mortgages – so repayments  will remain the same until the  end of the current term. It does  however mean that you can  expect to receive better interest  rates on your savings and  everyday items could start to  come down in price.  After more than a decade of  low interest rates, it’s hard to  say exactly how an increased  base rate will impact people  specifically – especially given all  the uncertainty surrounding the  situation in Ukraine. The rise in  the base rate is to try and combat  the increased supply issue of  oil given the sanctions against  Russia as well as an attempt to  ease the cost-of-living crisis we  were already facing. With the  base rate still currently below  1%, it may be advisable to assess  your mortgage situation soon –  before it potentially rises further. 

 If you’d like to discuss the options available to you, contact your adviser today. 

Recent Posts

Contact us anytime.

Opening Hours

Easy Mortgages Limited is an appointed representative of Mortgage Intelligence Ltd which is authorised and regulated by the Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only. 

Registered address; 41 Agincourt Avenue, Gosport, Hampshire, PO13 8NU. Registered in England & Wales under number 13862954 


We always aim to provide a high quality service to our customers. However, if you encounter any problems and we are unable to resolve them you can take your complaint to an independent Ombudsman. Our advice is covered under the Financial Ombudsman Service.

Web Design by Jellie Digital