Explaining Base Rate

The Government of the UK has a Monetary Policy Committee which sets the base interest rate, better known as the Base Rate. The bank adjusts this rate to maintain stability and uphold confidence throughout the financial system. Adjusting the Base Rate is also an attempt at making sure price increases meet the Government’s inflation target.

Since 1997 the Monetary Policy Committee has been responsible for setting the interest rate.

The Base Rate is significant when thinking about remortgage. Whether considering a fixed rate remortgage or a tracker rate remortgage (a remortgage directly tied to the base rate) it is important to know how the mortgage is affected by a base rate change.

Understand this rate can change and do so quickly. When sitting down with your lender to discuss a remortgage, having knowledge of how the Base Rate has changed over the past 12 - 24 months will be helpful in deciding which type of rate is more attractive.