How does the Bank of England base rate affect your UK mortgage payments right now?
If you happen to be one of those in the UK with a mortgage, then you most likely notice the news about the Bank of England (BoE) base rate. Even minute variations in this rate can transform your monthly payments enormously.
It doesn’t matter if you are on a fixed-rate, tracker mortgage, or considering remortgaging, it is always useful to understand the actual impact of the base rate on your mortgage. In this blog, we will discuss how the BoE base rate affects your UK mortgage payments.
What is the Bank of England base rate?
The BoE base rate is the interest rate banks pay when they borrow money from the central bank. When the base rate changes, it affects the rates banks charge you for mortgages, loans, and savings.
- If the base rate goes up, borrowing money costs more.
- If it goes down, borrowing costs less.
So, if you have a mortgage, the base rate really matters to you.
How does the base rate affect your mortgage?
It depends on what kind of mortgage you have. Here’s how each type reacts:
Tracker mortgages
These follow (track) the Bank of England base rate directly. For example, if your deal is the base rate + 1% and the current base rate is 4%, your rate is 5%.
So, when the base rate rises, your payments rise too. When it falls, your payments drop. If the base rate increases by 0.25%, then your new interest rate will be 5.25%
Standard Variable Rate (SVR) mortgages
This rate is set by your lender. It is not tied directly to the base rate, but most lenders adjust it when the base rate changes. SVRs are often higher, and they can change at any time the lender chooses.
Fixed-rate mortgages
Your interest rate stays the same for a set period with a fixed-rate mortgage. Fixed-rate mortgage deals tend to be over a 2, 3, 5, or even 10 year period. That means your monthly payments don’t change, no matter what happens to the base rate. Once your fixed term ends, though, you’ll usually move to your lender’s SVR unless you remortgage.
What happens when interest rates go up?
If the Bank of England raises the base rate:
- Tracker mortgage: Your payments increase automatically.
- SVR mortgage: Your lender will probably raise your rate too.
- Fixed-rate mortgage: Your payments stay the same until your fixed term ends.
Even a small rise can add up. For example, a 0.25% increase on a £250,000 mortgage over 25 years could mean paying between £30 to £40 more each month, depending upon what the original interest rate was.
What happens when the base rate goes down?
If the base rate falls:
- Tracker mortgage: Your payments drop.
- SVR mortgage: Your lender might lower your rate — but not always by the same amount.
- Fixed-rate mortgage: No change until your current deal ends.
Tracker vs fixed rate
Many people ask this question — and honestly, it depends completely on your personal situation.
Fixed-rate mortgages: Safe and predictable
Fixed-rate mortgages give you stability. Your payments stay the same for the whole term, so it’s easier to budget and plan.
They’re great if you:
- Want peace of mind and stable payments
- Have a tight budget
- Think interest rates might go up
- Are buying your first home or remortgaging soon
Downside: If rates fall, you won’t benefit until your deal ends — and leaving early can mean paying a fee.
Tracker mortgages: Flexible but potentially riskier
Tracker mortgages rise and fall with the base rate.
They’re good if you:
- Expect rates to drop
- Don’t mind some uncertainty
- Want flexibility without exit fees
Downside: If rates rise quickly, your payments will too — and that can be stressful.
Coming to the end of a fixed deal?
If your fixed-rate deal is ending soon, don’t wait until the last minute. When you switch to your lender’s SVR, your payments can jump quite a bit.
Start checking your options around six months before your deal ends. Remortgaging early could save you money.
First-time buyers
If you’re buying your first home, you will have noticed that rates are higher now than a few years ago. Unfortunately no one can see into the future to know whether that will change. A fixed-rate mortgage keeps your payments the same, which helps with budgeting. A short-term tracker could work if you think rates will drop.
It’s smart to talk to a mortgage adviser. They can look at your situation and help you choose the mortgage that’s best for you.
How much could my payments change?
Even a small change in interest rates can add or reduce your monthly payments by hundreds of pounds. Here’s a quick example for a £200,000 mortgage over 25 years:
| Interest rate | Approx. monthly payment |
| 4% | £1,055 |
| 5% | £1,170 |
| 6% | £1,290 |
As you can see, even a 1% change can add well over £100 a month — a big reason why keeping an eye on the base rate matters.
What to do if you’re worried about rising payments
Don’t panic — there are steps you can take:
- Check your mortgage type – Know if it’s fixed, tracker, or SVR.
- Know when your deal ends – You can usually start switching up to six months early.
- Compare rates – You might find a better deal before rates rise again.
- Talk to an adviser – They can guide you through your best options.
- Act early if things get tough – If you’re struggling, speak to your lender. They can help.
Why talking to a mortgage adviser helps
A good mortgage adviser can make all the difference. They can:
- Compare fixed and tracker mortgages
- Help you remortgage before your rate jumps
- Find deals you might not see online
- Save you time, stress, and money
Conclusion
The Bank of England base rate affects nearly everyone with a mortgage in the UK. Whether you’re on a tracker, SVR, or fixed deal, understanding how it impacts you helps you plan better.
Tracker mortgages change when the base rate changes, while fixed-rate mortgages stay the same for the length of your deal. SVRs can change at any time. When rates go up, your payments rise. When they go down, tracker mortgages usually drop first.
If you’re not sure what to do, now is a good time to review your mortgage. A quick call with us could help you save money and worry less.