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Bank of England increases base rate to 3% – what the rise means for your mortgage and savings

Bank of England increases base rate to 3% – what the rise means for your mortgage and savings

The Bank of England has increased the base rate from 2.25% to 3% – the largest single rise since 1989. This 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.

It's the eighth time in quick succession that the Bank has increased rates after it first lifted them to 0.25% from 0.1% in December last year.

The hike comes ahead of the new Prime Minister Rishi Sunak's Autumn Statement on Thursday 17 November. The Bank of England currently predicts that inflation will remain at around 10% for the rest of the year, before slowly starting to fall. Inflation stood at 10.1% in the 12 months to September 2022, according to the most recent figures from the Office for National Statistics.

Base rate rises will affect most mortgages unless they're fixed. If you have a mortgage and want to check what your bank or building society is doing in response to the rise, we'll be including responses from your provider below. Similarly, if you're a saver and want to check the rates, we'll be adding those in as they come too.

I have a mortgage. What happens now?

The vast majority of mortgage holders in the UK have a fixed-rate mortgage, so for most, nothing will change. The key points for mortgage holders are:

  • Fixes are fixed. But sort a new deal soon if yours is coming to an end. As the name suggests, rates – and the amount you pay – WON'T change during the fixed period.

  • Lenders MAY raise standard variable rate (SVR) or 'discount' mortgages. These move at the whim of lenders. You'll usually be on an SVR after your fix or tracker ends. A 'discount' mortgage, meanwhile, follows the SVR at a set rate, for example, if the SVR is 4% and the rate is SVR minus one percentage point, it's 3%.

  • On a tracker mortgage? Rates will increase. As the name suggests, these 'track' the base rate, so mortgage costs will go up. In general, this latest rise means about a £38 increase in your monthly payments on a £100,000 mortgage.

What should I do with my mortgage?

What you should do depends on what sort of mortgage you have now and whether you're close to the end of your initial mortgage term:

  • If you're on a fixed rate. Nothing will change with your existing deal, however, any new deal you remortgage to in future may now be more expensive. If you're close to the end of your current term, you might want to search for a new mortgage deal now. You can usually lock in a mortgage offer three to six months ahead of time.

    If you've six months or longer to go on your fix, you'll either need to wait for your initial deal term to run out, or pay the charge to leave early. Our Ditch your mortgage? calculator can help you decide.

  • If you're on a standard variable rate (SVR) or 'discount' mortgage. If you're on the SVR, you're free to remortgage to a new deal at any time. It's worth checking if you can as SVRs tend to be pricey.

    If you're on a discount mortgage that has gone up, you may be able to remortgage without penalty, but do check. If not, you'll either need to wait for your initial deal term to run out, or pay the charge to leave early. Again, our Ditch your mortgage? calculator can help you decide.

  • If you're on a tracker mortgage. If you're concerned about this rise, or further rate rises, check now to see if you can switch to a better deal. However, do check if there are penalties to leave your current deal now – many trackers do have them. If not, then you're free to switch to another mortgage.

    If you do have early repayment charges, you'll either need to wait for your initial deal term to run out, or pay the charge to leave early. Our Ditch your mortgage? calculator can help you decide.

If looking for a new deal, see our Remortgage guide or First-time buyers' guide for help, plus our Mortgage Best Buys comparison tool for the top deals. And if you're in need of a mortgage broker, visit our Cheap mortgages guide for the full breakdown.

Is your lender raising mortgage rates? 

PROVIDER CHANGE TO TRACKER MORTGAGES CHANGE TO STANDARD VARIABLE RATE (SVR) MORTGAGES
Bank of Ireland Up 0.75 percentage points from 1 Dec Under review. Current SVR 5.59%
Bank of Scotland Under review Under review. Current SVR 6.7%
Barclays TBC TBC
Clydesdale Under review Under review
Co-op Bank Under review Under review. Current SVR 5.49%
Cynergy Bank TBC TBC
Coventry Building Society Up 0.75 percentage points from 1 Dec Up 0.45 percentage points from 5.39% to 5.84% from 1 Dec
First Direct  Under review Under review
Halifax Under review Under review. Current SVR 4.74%
HSBC TBC TBC
Leeds Building Society Up 0.75 percentage points from 4 Nov Under review. Current SVR 5.99%
Lloyds Bank Under review Under review. Current SVR 4.74%
Metro Bank Up 0.75 percentage points from your next payment date Up 0.75 percentage points from 5.75% to 6.5% from your next payment date 
Nationwide
TBC
TBC
NatWest TBC TBC
Newcastle Building Society Under review Under review. Current SVR 4.91%
One Savings Bank TBC TBC
Post Office

Up 0.75 percentage points from 1 Dec

Under review. Current SVR 5.59%
Principality Building Society TBC TBC
RBS TBC TBC
Sainsbury's TBC TBC
Santander TBC TBC
Skipton Building Society

TBC

TBC
TSB TBC TBC
Ulster Bank TBC TBC
Virgin Money TBC TBC
West Brom Building Society No tracker product Under review. Current SVR 5.24%
Yorkshire Bank

Under review

Under review. Current SVR 5.99% (set to rise to 6.49% on 4 Nov for new borrowers and on 1 Dec for existing borrowers)
Yorkshire Building Society

Up 0.75 percentage points from 4 Dec

Under review. Current SVR 5.39% (set to rise to 5.89% from 6 Nov due to previous base rate rise)

Last updated 3 November 2022. This table refers to domestic mortgage rates only – changes may differ for buy-to-let mortgages.

I'm a saver. What happens now?

The base rate increase could affect all types of savings accounts. In general, savers benefit from base rate rises – though some high-street banks can be slow to pass increases on to customers, and new best-buy deals don't always emerge straightaway. We've asked all the main providers what their plans are, and here's what we have so far:

  • Coventry Building Society will increase its rates by up to 0.75 percentage points from Thursday 1 December. Easy-access accounts will pay a minimum of 1.65% and regular saver accounts will pay 3.15%.

Savers should wait a few days before switching

Whatever rate you're on currently, it may be worth waiting a few days to see if best-buy rates improve before switching. These are our current top picks, but they could change at any time. For a full round-up, see our daily-updated Top savings guide:

  • Up to 2.5% on easy access. The online-only Marcus offers the highest open-to-all rate of 2.5% on up to £250,000, and it allows you to open it with a minimum of £1. Yorkshire Building Society also pays 2.5%, but only on up to £5,000.
  • Up to 4.6% on a one-year fix. For a 'standard' savings account, RCI Bank is our top pick as it currently pays the top rate of 4.6%, can be opened online and offers monthly interest payments.
  • Up to 4.85% on a two-year fix. RCI Bank offers 4.85% interest and can be opened with a minimum of £1,000. You get the choice of when to take the interest, and you can access the account online.

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