Bank of England increases base rate to 4% – what it means for your mortgage and savings
The Bank of England has increased its base rate from 3.75% to 4%, in the first rise for more than three years.
By MoneySavingExpert
The Bank of England has increased its base rate from 3.75% to 4%, in the first rise for more than three years.
The Monetary Policy Committee voted by eight members to one to raise the rate at its meeting on Thursday 5 November. One member backed a larger increase to 4.25%.
The decision follows six consecutive holds. The change affects the cost of some mortgages and may influence returns on savings accounts.
Borrowers on tracker mortgages should see their rates rise by 0.25 percentage points. MoneySavingExpert estimates this could add around £15 a month for every £100,000 owed.
People on fixed-rate mortgages will not see an immediate change. Their payments should remain the same until the current deal ends.
Homeowners whose fixed-rate deal expires within the next three to six months may want to start comparing new mortgages. MoneySavingExpert also advises checking product-transfer deals offered by the existing lender.
Some borrowers may be able to lock in a new rate and later switch if a cheaper deal becomes available, although the terms and any charges should be checked carefully.
Variable-rate mortgage customers are expected to feel the increase through changes linked to the Bank of England rate.
Savers may also see some rates rise, although MoneySavingExpert says there is no need to delay moving money while waiting for the latest decision. Top easy-access accounts were offering more than 4.5%, with some accounts available at up to 6%.
The benchmark easy-access rate cited by MoneySavingExpert was 4.57% from Oxbury Bank. Availability and account conditions vary, so savers should check the details before switching.