What the Bank of England’s Latest Base Rate Rise Means for You

What the Bank of England’s Latest Base Rate Rise Means for You
Mark Langshaw

Author: Mark Langshaw - Content Manager

Updated: September 8, 2023

The Bank of England (BoE) has today increased its base rate from 4.25% to 4.5% as part of its ongoing strategy to curb inflation and tackle the cost of living crisis.

This move was widely expected, given that inflation remains at more than 10% and the central bank had upped its rate on the previous 11 occasions – but what does it all mean for you?

How existing homeowners will be affected

Existing homeowners with tracker and variable rate mortgages will be impacted the most by the bank’s latest base rate rise. Many will see their mortgage payments increase immediately.

The base rate increase from 4.25% to 4.5% will see those on tracker mortgages paying around £24 extra per month, while those on their mortgage provider’s standard variable rate (SVR) are expected to pay approximately £15 extra each month on average.

If you want to get an idea of how much your variable rate mortgage will rise by, enter your existing rate into the calculator below and compare to one that’s 0.25% higher.

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Mortgage Difference Calculator

Our mortgage difference calculator will show you how much your monthly repayments could change with a different interest rate to what you have currently. Enter your outstanding mortgage amount, remaining term, both current and new interest rate. Our calculator will then do the rest.

Enter the amount of your outstanding mortgage loan here
Enter the outstanding term of your loan
Enter the rate you’re currently paying
Enter the new interest rate here

We estimate your current monthly repayments are

At this rate, your payments could change by…

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Speak to an experienced broker to help find you the best mortgage solution for your current circumstances.

Those locked into fixed-rate mortgages won’t see an immediate increase to their monthly payments, but anyone who needs to remortgage in the near future might find that the rates available to them for this product type is higher than before the base rate increase.

The impact on homebuyers

If you’re applying for a mortgage in the near future, this base rate increase might mean that the range of rates and deals available to you across all product types is higher than it was before.

But it’s not all bad news. The key word here is might. As was the case with previous base rate increases, the BoE’s decision was widely expected, so many mortgage lenders had already factored the increase into their product range and did not alter their rates in the aftermath.

Others, however, have opted to refresh their offerings to coincide with each Monetary Policy Committee meeting and altered their rates and term lengths either before or after them.

For example, Santander, Clydesdale Bank, TSB and Natwest have all upped their rates by a fraction of a percentage in light of the most recent news from Threadneedle Street.

Take a look at our rates table below to get an idea of the latest deals now available

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Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market and help you secure the best one

Last updated October 2023

Please note that the above rates were accurate at the time of writing, but are always subject to change at the lender’s discretion. Speaking to a mortgage broker is the best way to find the most up-to-date deals.

Given that favourable interest rates are, in general, more difficult to come by during times of high inflation, speaking to a mortgage broker is recommended if you are applying for a mortgage or are remortgaging. They can help you navigate the market and avoid falling into the trap of applying with a lender who has hiked their rates in response to the BoE’s policy.

Are there any benefits to a higher base rate?

Yes! Firstly, if you have a savings account, the interest rate on that might actually rise and you will see a greater return on your investment. This is obviously good news for anyone who is building up a mortgage deposit and is using a savings account to squirrel away the funds.

Secondly, an increase to the base rate should – in theory – help to reduce inflation going forward, strengthen the economy, and do its part to help us navigate the cost of living crisis.

Some economists and industry experts believe this could be the final, or at least one of the last, consecutive base rate increases. If you’re wondering whether this means that you should delay any mortgage or remortgage plans until the economic outlook is brighter, your best move is to speak to a mortgage broker, as they can offer bespoke advice about your options.

Make an enquiry with us and we’ll match you with the right mortgage broker today.

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