Bank of England base rate remains at 0.1%
The Bank of England base rate will remain at 0.1% after the majority of the Monetary Policy Committee (MPC) - at seven versus two - today voted in favour of maintaining the rate. The base rate is used by the Bank to charge other banks and lenders when they borrow money – and influences what borrowers pay and savers earn.
The Bank had been under pressure of late to increase the base rate to try to curb rising inflation. The consumer prices index measure of inflation currently stands at 3.1%, while new forecasts from the Office for Budget Responsibility (OBR) last month predicted that the base rate could rise to 3.5% if inflation continues to rise. But for now there's no change. The MPC will deliver its next decision on 16 December.
The base rate fell to 0.1% on 19 March 2020 from 0.25% - a rate it had dropped to on 11 March 2020. Prior to this the base rate had been at 0.75% since 2018.
How the base rate can impact your finances
The base rate has remained the same today, but when it rises and falls it can impact your finances - here are the key need-to-knows:
- Many mortgage rates are linked to the base rate, so could go up or down depending on how the rate changes. If you're on a standard variable rate mortgage, your rate may change with the base rate, and if you're on a 'tracker' mortgage - which, as the name suggests, tracks the base rate - it definitely will. If you're on a fix, your rate won't change for now, but when it ends and you remortgage rates may have risen.
MoneySavingExpert.com founder Martin Lewis has recently urged EVERYONE with a mortgage to check now if their existing deal is as good as it can get and if not to check if they can remortgage to save £1,000s. That's because if the base rate rises, the top deals will likely disappear. See Martin's Eight mortgage cost-cutting need-to-knows for full info.
- For savers, a rate rise is generally good news while a rate drop is typically bad news. A rate rise should push best-buy rates up on both savings accounts and ISAs, so if that happens in future you may be able to earn more by ditching and switching. Banks may also increase variable rates, though it's far from guaranteed. Conversely, when the base rate drops - it means the interest you earn is likely to fall.
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