Buy to Let Interest Rate Guide
The Bank of England Base Rate
The Essentials
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What You Should Know About The Bank Of England Base Rate
What is the base rate?
The base rate is the interest rate that The Bank of England charges financial institutions. It, therefore, influences the interest rates that financial institutions, banks and lenders charge borrowers. Any base rate changes, either up or down, can have a huge impact on mortgages, credit cards, personal loans and savings accounts.
But who decides the base rate?
The Monetary Policy Commitee (MPC) is responsible for the base rate and typically they meet every six weeks to decide on what the base rate should be.
Why does the base rate change?
The MPC works closely with the Government to adjust the base rate inline with various economical targets to keep inflation levels low and stable.
When will the next Bank of England base rate meeting?
The Bank of England is next due to meet on 30 July 2026
Mortgage Insights…
It is safe to say we’ve seen turbulent economical times of late, but with the appointment of Kier Starmer as Prime Minister, it seems to have created a good level of stability for the markets and I believe there is so much to be positive about right now.
In response to Kier’s appointment and the recent fiscal announcements, we’ve seen mortgage rates soften a bit and we’re seeing daily updates from lenders coming back with new and improved Fixed-rates, plus swap rates are certainly looking more stable.
Clearly, there is a huge amount to do and a huge amount of Government debt to clear, through likely tax rises and spending cuts which may put some volatility back to markets when it comes. This is why understanding the base rate has never been so imperative for landlords. Being prepared and able to adapt is what makes the mortgage market so robust.
We are monitoring the daily updates and we will be doing all we can to help landlords stay agile and adapt to each and every change as they arise. I truly believe this is an opportunity for us all to ‘sharpen our pencils’ and thrive, whatever happens in the coming months.
Matthew Rowne
Director
Recent History of The Base Rate
The base rate has stayed extremely low since the financial crisis of 2008, however, the base rate has crept up since December 2021 due to economical and political changes. Here’s the history of the base rate since 2017.
Tracking The Bank of England Base Rate – 2017 to today
Source: Official Bank Rate history | Bank of England database
Take a look back even further:
Source: Official Bank Rate history | Bank of England database
Discover the latest rates…
Curious about the latest rates available from lenders across the market, head over to our mortgage rates page to find out more or chat with one of the team.
Different Types of Mortgages
The type of mortgage that you choose will ultimately decide how much or little base rate fluctuations impact your monthly mortgage payments. In a nutshell, here is what the different types of mortgages mean:
Fixed Rates
One of the more popular choices for both homeowners and landlords, having a Fixed rate mortgage means that your monthly payments will remain the same each month during the initial agreed period, usually 2-year or 5-years, regardless of any changes to the Base Rate.
Tracker Rates
Increasing in popularity due to the current economic outlook, a Base Rate Tracker mortgage is a type of variable rate mortgage where the monthly payments are directly linked to The Bank of England base rate. For example, your mortgage rate could be 2.25% plus the current Bank of England base rate.
Discounted Rates
Also increasing in popularity, a Discounted rate mortgage is a type of variable rate mortgage that follows the lender’s Standard Variable Rate (SVR), but with an agreed discount percentage.
Variable Rates
A Variable interest rate mortgage is a type of mortgage that is set by the banks themselves. These rates are set depending on several interest rates such as the base rate, but are not directly linked to The Bank of England base rate.
Stepped Fixed Rates
A Stepped Fixed Mortgage is a fixed-rate mortgage which initially starts with a lower fixed rate, and then periodically increases over an agreed period. These types of mortgages can be favourable for those looking to keep the monthly payments lower at the start of the mortgage with an agreed uplift of the monthly payment at set periods.
Capped Rates
Another type of variable mortgage with one major benefit, a capped limit to which the interest rate (and your monthly payment) can’t surpass. The Capped rate is typically agreed upon for an initial period, should as two or five years, after which the mortgage would move onto the Standard Variable Rate.
These are the main types of mortgages that you may come across, there are others. If you would like to discuss this further or discuss which type of mortgage may suit your specific circumstances, you can chat with one of our buy to let advisers.
How The Base Rate Impacts Mortgages
If the base rate goes up
Typically when the base rate goes up:
- If you are on a Tracker mortgage, your monthly payments will directly track the base rate so your payments will increase.
- If you are on a Discount mortgage, your lender will have agreed on a discount below their Standard Variable Rate, therefore if their SVR increases, so will your mortgage payments, in line with the discount.
- If you are on a Variable mortgage, depending on what your lender chooses to do, your monthly payments could go up.
- If you are on a Fixed rate, it will not impact your mortgage payments immediately, but it will likely impact how much you pay when you come to remortgage.
If the base rate goes down
Typically when the base rate goes down:
- If you are on a Tracker mortgage, your monthly payments will directly track the base rate so your payments will decrease.
- If you are on a Discount mortgage, your lender will have agreed on a discount below their Standard Variable Rate, therefore if their SVR decreases, so will your mortgage payments, in line with the discount.
- If you are on a Variable mortgage, depending on what your lender chooses to do, your monthly payments could go down.
- If you are on a Fixed rate, it will not impact your mortgage payments immediately, but it will likely impact how much you pay when you come to remortgage.
If you would like to know more about the latest buy to let rates, chat with one of our buy to let mortgage advisers. Enter your details and we will be in touch shortly.
If you are in a hurry, you can give us a call on 08009499410 for more information.
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