Bank of England increases base rate to 5.25% - here's how it impacts your mortgage and savings

I have a mortgage. What happens now?

Most mortgage holders in the UK are on fixed-rate mortgages – so won't see any immediate changes. Here are the key points:

• Fixes are fixed. As the name suggests, rates – and the amount you pay – WON'T change during the fixed period. Though this also means you're locked in if interest rates come down.
  
  
• 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. Currently, a typical SVR is between 7.5% and 8.5% and this is likely to rise following today's announcement. A 'discount' mortgage, meanwhile, follows the SVR at a set rate, for example, if the SVR is 7% and the rate is SVR minus one percentage point, it's 6%.
  
  
• 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 £14 increase in your monthly payments for each £100,000 you owe on your mortgage.

Lender by lender analysis of what's happening to mortgage rates

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, as interest rates on fixed mortgages have shot up dramatically over the past 12 months. If you want price certainty and 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 till you're in the final three to six months of your initial deal, or pay the charge to leave your current mortgage early if you want to switch now.
  
  
• 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. SVRs tend to be pricey, so it's likely you could save by switching your mortgage – do check, and talk to a mortgage broker about your options.
  
  If you're on a discount mortgage that has gone up, you may be able to remortgage without penalty, but do check. If not, again, you'll either need to wait till you're in the final three to six months of your initial deal, or pay the charge to leave your current mortgage early.
  
  
• 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 – though currently many existing tracker mortgage rates are far cheaper than today's fixes. Also check if there are penalties to leave your current deal now – many trackers do have them.
  
  If you do have early repayment charges, you'll either need to wait till you're in the final three to six months of your initial deal, or pay the charge to leave early. If not, then you're free to switch to another mortgage.

If you're worried about keeping up with your repayments as rates rise, see our guide on what to do if you're struggling with your mortgage.

If you're 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.