Interest rate hits 5% - what it means for mortages

Interest rate hits 5% - what it means for mortages hero

The Bank of England has increased the base rate to 5% - a bigger increase than most forecasters expected.

The last time the rate was at 5% or higher was in 2008. 

It makes this the 13th time in a row that the Central Bank has voted to increase rates, after it first lifted them to 0.25% from 0.1% in December 2021.

The most previous increase took it to 4.5% only a few weeks ago.

Seven of the nine members of the committee voted for the 5% rate - two wanted no change at all.

What is the base rate?

The rate is used by the Central Bank to charge other banks and lenders when they borrow money – and so it influences what borrowers pay and what savers earn.

Why would the bank choose to increase the rate?

Higher interest rates are intended to lower inflation by giving mortgage holders less to spend.

Why should I care?

If you have a mortgage or want one, you'll need to know what the change means for you!

The base rate influences the interest rates that many lenders charge for mortgages, loans and other types of credit they offer people.

Here's what Broadland Consultants have to say about it:

Mortgage lenders' criteria and deals available in some areas of the market is changing very regularly, so it’s really important that clients seek expert mortgage advice as to which lender is most likely to approve their mortgage and offer them the best deal.