Rate changes

What is the Base Rate?

The base rate is the official bank rate set by the Bank of England. It affects the interest rates offered by banks, building societies and other financial institutions. By changing the official bank rate, the Bank of England seeks to influence overall borrowing in the economy.

The Bank of England base rate can go up or down and is announced at the Bank of England’s Monetary Policy Committee regularly.

When does it change?

The Bank of England Monetary Policy Committee consider the base rate at regular times throughout the year. The dates of these meetings are in the press, or available from the Bank of England website. Where the Bank of England announce a change, we will communicate this to customers whose mortgage rate will change, and include information about when the change is effective.

Will a change affect me?

A change to the Bank of England Base Rate may affect you, depending on your mortgage rate type:

  • Fixed Rates – If you have a Fixed Rate mortgage, your rate will not change at any point during the initial period, regardless of changes elsewhere
  • Tracker Rates – A Tracker Rate is directly linked to the Bank of England Base Rate – your rate will be higher than the Base Rate, and so any increase to the Base Rate is reflected exactly in your rate, unless your rate has a ‘floor’ or ‘cap’
  • Standard Variable Rate (SVR) – The Bank’s standard variable rate is not directly linked to the Base Rate. However, the Base Rate is one of a number of factors that we use to decide what the SVR should be.

How much will it cost?

Once a change is announced, we will write to you to confirm the exact change to your payments.

What are ‘floors’, ‘caps’ and ‘collars’?

Although Tracker Rates are tied to the Bank of England Base Rate, they may have certain rules in place. For example, they may have a ‘floor’, which is the minimum amount that the rate can fall to. They may also have a ‘cap’ or ‘collar – these are temporary limits which form part of an initial rate, and limit the highest and lowest rate that you could pay during that period.

Do I need to do anything?

If your mortgage is paid by Direct Debit, then no – the Bank will take care of the changes and this will be reflected in your next payment. If you pay by another means, then you may need to amend this payment to ensure that we receive the new mortgage payment.

If you overpay, you may wish to consider if making overpayments is still appropriate in light of your new mortgage payment; you may want to increase or decrease your overpayment amount. You can visit our overpayments page for more information.

Concerned about future base rate increases?

If you have a base rate tracker mortgage, the actual rate you pay will increase if the base rate increases. Any mortgage on Platform’s Standard Variable Rate (SVR) is also likely to increase should the base rate go up. If you are concerned about your mortgage rate increasing, please contact us.