On 21st March 2024, The Bank of England's (BoE) Monetary Policy Committee (MPC) voted to keep the Bank of England base rate at 5.25% for the sixth consecutive time. Of the 9 members on the Committee 8 voted to keep the base rate at 5.25% and one voted for a 0.25% cut. It is the first time since September 2021 that no member of the Committee voted for a base rate rise.
The Bank of England base rate therefore remains at its highest level since March 2008 following a number of rate rises between December 2021 and August 2023.
In this article, we explain the impact that the latest base rate decision will have on both borrowers and savers. We also provide some handy resources and tools that will help if you are due to remortgage soon. For predictions on where the Bank of England base rate is likely to be heading in the coming months, check out our article 'Are interest rates going to go down in 2024? Latest analysis & informed predictions'.
What is the Bank of England base rate?
The Bank of England base rate refers to the interest rate at which the Bank of England lends money to banks, building societies and other lenders. An increase in the Bank of England base rate usually signals an increase in the rate that banks and other lenders charge in order to maintain profitability. On the flip side, savers should be able to access improved savings rates. However, some providers can be slow to pass on the rise (if they do at all) and so it is worth comparing the best savings rates on offer.
Why has the Bank of England base rate remained the same?
The Bank of England's Monetary Policy Committee (MPC) meets every 6 weeks to decide on the Bank of England base rate. The rate was predicted to remain at 5.25% and so the committee's decision to keep the Bank of England base rate at 5.25% did not come as a surprise.
Increasing the base rate of interest is one of the measures that the Bank of England can apply in order to control the rate of inflation. The rate of inflation in the UK as measured by CPI was 3.4% for March 2024 as inflation continues to reduce.
A summary on the Bank of England website states that "The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation. On that basis, the Committee will keep under review for how long Bank Rate should be maintained at its current level".
How has the bank rate increased over time?
The graph below shows how the Bank of England base rate has changed over time.
(Source: Bank of England)
Rate rises and how they impact you: December 2021 - February 2024
The Bank of England last raised the base rate back in August 2023 with the increase aimed at helping to slow inflation. We provide a summary of the Bank of England base rate rises since December 2021 below.
| Date | Interest rate rise | Previous interest rate | New interest rate | Increase to average monthly mortgage repayments per £100k borrowed* |
| 16th December 2021 | +0.15% | 0.10% | 0.25% | £8 |
| 2nd February 2022 | +0.25% | 0.25% | 0.50% | £13 |
| 17th March 2022 | +0.25% | 0.50% | 0.75% | £13 |
| 5th May 2022 | +0.25% | 0.75% | 1.00% | £13 |
| 16th June 2022 | +0.25% | 1.00% | 1.25% | £13 |
| 4th August 2022 | +0.50% | 1.25% | 1.75% | £26 |
| 22nd September 2022 | +0.50% | 1.75% | 2.25% | £26 |
| 2nd November 2022 | +0.75% | 2.25% | 3.00% | £39 |
| 15th December 2022 | +0.50% | 3.00% | 3.50% | £26 |
| 2nd February 2023 | +0.50% | 3.50% | 4.00% | £26 |
| 23rd March 2023 | +0.25% | 4.00% | 4.25% | £13 |
| 11th May 2023 | +0.25% | 4.25% | 4.50% | £13 |
| 22nd June 2023 | +0.50% | 4.50% | 5.00% | £26 |
| 3rd August 2023 | +0.25% | 5.00% | 5.25% | £13 |
| 21st September 2023 | +0.00% | 5.25% | 5.25% | £0 |
| 2nd November 2023 | +0.00% | 5.25% | 5.25% | £0 |
| 13th Decmeber 2023 | +0.00% | 5.25% | 5.25% | £0 |
| 1st February 2024 | +0.00% | 5.25% | 5.25% | £0 |
| 21st March 2024 | +0.00% | 5.25% | 5.25% | £0 |
| TOTAL | £268 |
*assumed mortgage term is 25 years
How does the BoE interest rate review affect you if you have a mortgage?
Fixed-rate mortgage customers
Those on a fixed-rate mortgage will not see a change to the interest rate they pay unless, of course, the mortgage deal term comes to an end. If your deal is due to end soon, you should consider how the previous bank rate rises will affect the new rate that you are able to secure. Our article 'Are interest rates going to go down in 2024? Latest analysis & informed predictions' provides further insight into remortgaging and what to do if you are due to remortgage in the coming months.
It is worth remembering that although interest rate rises have been paused, if your current fixed-rate deal was in place prior to December 2021 (when rates first started going up), then you should factor in all of the interest rate rises combined. As shown in the table above, this equates to a rise of around £268 per month, per £100,000 borrowed, based on a 25-year mortgage term.
Variable rate or tracker mortgage customers
Those with tracker or variable rate mortgages should not see a change to their monthly mortgage payments. Our interest rate calculator can be used to work out the potential impact that rate rises and cuts have on your monthly mortgage payments. You'll need to know your initial mortgage term, the amount borrowed at the start of the deal and your current mortgage rate.
Anyone wanting to know how rate rises and cuts impact their finances should speak with an independent mortgage adviser* as they can provide advice on remortgaging. When considering remortgaging, always check to see if there are any Early Repayment Charges (ERC) and check to see how long is left on your current mortgage deal. Take a look at the best mortgage deals by using our mortgage rate comparison tool or checking out our article 'Best mortgage rates in the UK'.
Help if you're unable to afford your mortgage payments
If you are worried about how you will afford your mortgage due to higher interest rates, as well as increases in the cost of living, then you should get in touch with your lender as soon as possible. Your lender should be able to find a solution that can help ensure mortgage repayments are not missed. Solutions could include extending the length of your mortgage, converting part or all of your repayment mortgage to an interest-only mortgage, or allowing you to take a mortgage payment holiday.
Check out our article 7 tips for dealing with mortgage arrears, or alternatively, you may find additional support from the following organisations helpful:
How does the BoE interest rate review affect you if you have credit cards, loans or overdrafts?
Credit cards
If you have an existing credit card with an agreed interest-free period or promotional interest rate you shouldn't notice any impact from the latest Bank of England base rate announcement.
One way to avoid a rise in interest on your credit card from any future interest rate announcements is to complete a 0% balance transfer, by moving your existing credit card balance to a 0% balance transfer credit card. To ensure you pay no interest on your repayments, the balance needs to be repaid within the promotional interest-free period. Be aware that most (not all) balance transfer credit cards charge a balance transfer fee, usually somewhere between 2% and 5%, and of course, you will be credit-checked during the application process. Find out more in our article, 'Best 0% balance transfer credit cards'.
Loans
If you already have a loan with a fixed interest rate then you are unlikely to be affected by changes to the base rate. If you are looking for a new loan then you can compare the best loan deals in our article, 'Best personal loans'.
Overdrafts
As the Bank of England's base rate has not changed, the interest rate charged on your overdraft is likely to remain the same. However, if your Bank or Building Society is going to change the rate of interest charged, you should receive a notification in advance, giving you time to consider your options.
How does the BoE interest rate review affect you if you have savings?
As the Bank of England base rate has not changed since August, it is possible that we may have already hit the peak of high-interest rates on savings accounts, so now might be a good time to secure the best rate on your savings. Our article, 'How to get over 5% on your savings' summarises some of the best rates on the market and our regularly updated article, 'Best savings accounts in the UK' is regularly updated with the best savings rates for personal and business accounts.
If you are looking for the best savings rates then you should always shop around for the best deal. You can also check out the best savings rates using our Savings Best Buy tables. Right now you can get as much as 8.00% interest on a Regular Saver account.
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