The Bank of England has now held base rate since last summer and the next move is tipped to be a cut. Our calculator lets you work out what a move up or down could cost you.
The base rate was held again by the Bank of England in May 2024 at 5.25 per cent, for the sixth time in a row.
The last move up was a 0.25 percentage point rise to the base rate in August 2023 and interest rate forecasts suggest a cut could arrive this summer.
You can use our calculator to work out how much extra you would pay on your mortgage if your lender raises the rate you are paying or how much you would save if rates came down.
The calculator lets you use your current mortgage rate and see how different levels of rate rises or falls would affect interest and monthly payments.
Enter a figure for the size of the rate rise, for example, 0.25, 0.50. or 0.75, or a negative value (eg -0.25) for a rate cut.
> Check the best live mortgage rates you could apply for with our mortgage finder
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What is happening to interest rates
At its meeting ending on 8 May 2024, the Bank of England’s Monetary Policy Committee voted by a majority of 7–2 to maintain Bank Rate at 5.25 per cent. Two members preferred to reduce Bank Rate by 0.25 percentage points, to 5 per cent.
This was the sixth successive rate hold after base rate shot up swiftly due to an inflation spike. This followed more than a decade in the doldrums after the financial crisis and then the Covid pandemic.
The Bank of England’s base rate, officially known as Bank Rate, rose from 0.1 per cent in December 2021 to 5.25 per cent in August 2023, where it has remained since.
At present markets expect that the base rate will see a first cut in summer 2024 but are divided on how fast it will then fall. Some suggest two to three cuts this year, while others believe there may be just one.
The key factor is what happens with inflation and the economy.
The Bank of England’s Monetary Policy Committee – the group of expert economists who vote on what the base rate should be – aims to keep inflation under control.
The idea is that by raising base rate, it raises the cost of borrowing and that reduces demand for it from consumers, households and businesses, which slows the economy down.
In theory, this should eventually reduce consumer prices index inflation, which is on its way down but currently still above the Bank of England’s 2 per cent target at 3.2 per cent.
Base rate vs mortgage rates
When the Bank of England changes the base rate some mortgage rates will move, but not all.
Fixed deals will remain at the same level until they finish, base rate trackers will move by the same amount as the Bank’s shift, and standard variable rates or other deals linked to them will move by an amount decided by the lender.
The cost of fixed rate mortgages has risen substantially in recent years driven higher by the Bank of England raising rates.
That period has seen two major spikes, one after Liz Truss and Kwasi Kwarteng’s ill-fated mini-Budget and another due to an inflation panic in spring / summer of 2023.
The market has calmed down since then but a reining in of rate cut expectations has seen mortgage rates recently rise.
Read our What next for mortgage rates? guide to get the latest news on what is happening with rates.
Latest interest rates and mortgages news
Read our regularly updated guides to find out more:
When will interest rates fall?
What next for mortgage rates and should you fix?
Our Mortgages & home section also features all our latest mortgage rates articles.
Savers are benefitting from higher rates – check the best savings rates in our independent tables.
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