What is the current base rate?

The current Bank of England base rate is 0.75%. It hasn’t changed since August 2018.¹

What is the Bank of England base rate?

The Bank of England base rate is essentially an interest rate. It’s also referred to as ‘bank rate’, ‘interest rate’ or simply ‘base rate’. Currently the base rate is 0.75%

The base rate is the interest rate that banks and lenders pay when they borrow from the Bank of England.

It is the most important interest rate in the UK and influences most other interest rates, including your savings accounts, credit cards, loans and mortgages.

How is the base rate set?

The base rate is decided by the Monetary Policy Committee (MPC). The committee meets roughly every 6 weeks. The next meeting is on the 26th of March, and the one after that is on the 7th of May.

The MPC changes the base rate to meet government targets to keep inflation low and stable.

The rate was cut to a record low of 0.50% following the financial crisis of 2008/9, for example.

It stayed at the same level for years before being cut to a new low of 0.25% in August 2016 after the Brexit vote. It’s since been increased twice to its present level of 0.75%.

Bank of England base rate history

The Bank of England base rate hasn't changed since August 2018.

Here's a list of every time the base rate changed since 2000

  • August 2018: 0.75%

  • November 2017: 0.50%

  • Aug 2016: 0.25%

  • March 2009: 0.50%

  • February 2009: 1.00%

  • January 2009: 1.50%

  • December 2008: 2.00%

  • November 2008: 3.00%

  • October 2008: 4.50%

  • April 2008: 5.00%

  • February 2008: 5.25%

  • December 2007: 5.50%

  • July 2007: 5.75%

  • May 2007: 5.50%

  • January 2007: 5.25%

  • November 2006: 5.00%

  • August 2006: 4.75%

  • August 2005: 4.50%

  • August 2004: 4.75%

  • June 2004: 4.50%

  • May 2004: 4.25%

  • February 2004: 4.00%

  • November 2003: 3.75%

  • July 2003: 3.50%

  • February 2003: 3.75%

  • November 2001: 4.00%

  • October 2001: 4.50%

  • September 2001: 4.75%

  • August 2001: 5.00%

  • May 2001: 5.25%

  • April 2001: 5.50%

  • February 2001: 5.75%

  • February 2000: 6.00%

How does the base rate affect mortgages?

The Bank of England base rate strongly influences mortgage interest rates and whether they go up or down. So it’s an important figure for anyone who has a mortgage or wants to get one.

If the bank rate goes up

  1. Funding for lenders becomes more expensive

  2. That extra cost is passed onto borrowers

  3. Borrowers usually pay more in interest on their mortgage every month

To avoid the possibility of higher interest rates homebuyers tend to go for a fixed rate mortgage.

If the bank rate goes down

  1. Funding for lenders becomes cheaper

  2. Borrowers usually pay less in interest on their mortgage every month

Will the base rate rise?

At the moment the base rate could go either up or down, though it hasn’t seen any change since August 2018.

The decision on whether to increase the BoE base rate relies on what’s going on in the economy.  

The base rate is usually reduced during recessions so that people can more comfortably afford their repayments. 

So, depending on what happens to the British economy after Brexit, the rate could go up or down.

Will the base rate rise after Brexit?

No one is certain exactly which way rates will go after Brexit. 

The MPC will make a decision on whether to increase the base rate when it’s revealed what kind of Brexit deal is agreed.

If you’re worried that the base rate might go up, right now could be a good time to consider fixing your mortgage. 

As the base rate is currently at a very low 0.75%, it could be worth fixing now before we find out the outcome of Brexit, where the MPC could decide to increase it if the UK leaves the EU with a good deal.

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Sources

¹ Bank of England