What the Bank of England’s base rate rise means – in numbers
The Bank of England has increased the base rate to 1% in an attempt to curb inflation. It’s the fourth increase since the start of December, when the base rate was at 0.1%. Here’s what it could mean for your finances:
2009 The last time the Bank base rate was 1%. It was cut from 1.5% to 1% in February that year as the credit crunch took hold. The next month it was reduced to 0.5%, where it stayed until August 2016 It was cut then to offset the impact of the Brexit vote on the economy. UK borrowers have lived through 13 years of very low interest rates.
7% The current rate of inflation. One of the Bank of England’s jobs is to hit a 2% inflation target. It expects inflation to increase to 10% before the end of the year, despite its efforts to control it by raising interest rates.
1,092,000 Number of borrowers on a standard variable rate mortgage. These home loans have an interest rate set by the bank or building society. Some are explicitly linked to the base rate so will automatically go up in line with it, but others are set at the lender’s discretion.
£504 How much more a £200,000 variable rate mortgage will cost each year as a result of today’s increase, according to figures from UK Finance. It says a 25 basis points rise in rates adds £42 a month to repayments.
4.71% The average standard variable rate charged by UK mortgage lenders, according to Moneyfacts. In December 2021 this stood at 0.31%. It has not risen by as much as the base rate because not all lenders have moved in line with the base rate.
841,000 Number of borrowers on a tracker mortgage. These have an interest rate linked to the base rate so will definitely increase in cost – probably from next month. UK Finance says the average balance on a tracker mortgage is
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