Bank of England base rate guide
Base rate is just 0.1%. Bank rate stays at 0.1% after 6 May MPC meeting. Find out what the base rate is and how it affects your mortgage
What is the current base rate?
The Bank of England base rate is currently 0.1%.
It dropped from 0.25% to 0.1% on 19 March 2020 to help control the economic shock of coronavirus.
The bank reduced the base rate from 0.75% to 0.25% 1 week earlier on 11 March 2020.
On 21 May 2020 the governor of the Bank of England, Andrew Bailey, said that the base rate could be reduced even further. Possibly becoming negative in the future.
At the most recent base rate meeting on 6 May 2021, the Bank of England decided to keep the base rate at 0.1%.
This is the lowest interest rate the UK has ever seen.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Base rate and coronavirus
The spread of coronavirus, and the measures being taken to contain it, will result in an economic shock that could be "sharp and large", said the Bank of England.¹
But it should be temporary, it added.
You can check how coronavirus could impact mortgage interest rates using our mortgage comparison tool.
What is the Bank of England base rate?
The Bank of England base rate is an interest rate. It’s also referred to as ‘bank rate’, ‘interest rate’ or ‘base rate’.
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. It influences most interest rates, including savings accounts, credit cards, loans and mortgages.
How is the base rate set?
The Monetary Policy Committee (MPC) decides the base rate. The committee meets to discuss it every 6 weeks.
The MPC met on 6 May and decided to keep the base rate at 0.1%.
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 0.5% following the financial crisis of 2008/9.
It stayed at the same level for years before the MPC cut it to a new low of 0.25% in August 2016 after the Brexit vote.
It was 0.75% from August 2018 to March 2020 when it was cut to 0.25% because of coronavirus.
The base rate was then cut again to 0.1% on 19 March 2020.
Can the base rate be negative?
On 21 May 2020, the Bank of England said that the base rate could drop lower than 0.1%, possibly to a negative interest rate.
The bank's governor, Andrew Bailey, said they're looking at other banks that have used negative interest rates to see how they could work in the UK.
A negative interest rate means that you do not pay any interest when you borrow money. Instead, the lender pays you interest.
If the Bank of England sets a negative base rate, it does not mean that there will be negative fixed rate mortgages.
If you are on a tracker or discount rate mortgage, you could end up with smaller monthly repayments.
When is the next Bank of England base rate meeting?
The next meetings are on 24 June and 5 August.
The Monetary Policy Committee (MPC) meets around every 6 weeks to discuss if the base rate should go up or down.
The most recent base rate meeting was on 6 May, when the base rate was kept at 0.1%.
Bank of England base rate history
Here's how the Bank of England base rate has changed since 2000:
March 2020 (19th): 0.10%
March 2020 (11th): 0.25%
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 impacts mortgage interest rates.
They're important for anyone who has a mortgage or wants to get one.
The graph below shows you how mortgage rates change when the Bank of England bank rate changes.
If the bank rate goes up:
funding for lenders becomes more expensive
lenders pass that extra cost onto borrowers
borrowers usually pay more in interest on their mortgage every month
To avoid the possibility of higher interest rates you can choose a fixed rate mortgage.
If the bank rate goes down:
funding for lenders becomes cheaper
borrowers usually pay less in interest on their mortgage every month
Will the base rate rise after Brexit?
No one is sure how rates will change now that the UK has left the EU.
The UK and the EU are set to clash again as the UK tries to get a Canada style free trade agreement.
Both sides said they’d walk away from talks on a Brexit trade deal unless the other side gave way on their red lines.
If you’re worried that the base rate going up again, now could be a good time to consider fixing your mortgage. This could be a good time as the base rate is currently very low.
¹ Bank of England
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Your home could be repossessed if you don't keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.