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The Bank of England has maintained the base rate since last summer and a cut is expected to be the next step. Our calculator allows you to calculate what an up or down move could cost you.
The Bank of England again maintained the base rate in May 2024 at 5.25 percent, for the sixth consecutive time.
The last increase was a 0.25 percentage point increase in the base rate in August 2023 and interest rate forecasts suggest a cut could come this summer.
You can use our calculator to calculate how much more you would pay for your mortgage if your lender increases the rate you are paying or how much you would save if rates fell.
The calculator allows you to use your current mortgage rate and see how different levels of rate increases or drops would affect interest and monthly payments.
Enter a figure for the size of the rate increase, for example, 0.25, 0.50. or 0.75, or a negative value (e.g. -0.25) for a rate cut.
> See the best live mortgage rates you can apply for with our mortgage finder
What is happening with interest rates?
At its meeting ending May 8, 2024, the Bank of England’s Monetary Policy Committee voted by a majority of 7 to 2 in favor of keeping the bank rate at 5.25 percent. Two members preferred to reduce the bank rate by 0.25 percentage points, to 5 percent.
This was the sixth consecutive rate hold after the base rate spiked rapidly due to a rise in inflation. This followed more than a decade of stagnation after the financial crisis and then the Covid pandemic.
The Bank of England’s base rate, officially known as Bank Rate, rose from 0.1 percent in December 2021 to 5.25 percent in August 2023, a level where it has remained since.
Markets currently expect the base rate to see a first cut in the summer of 2024, but are divided on how quickly it will fall afterwards. Some suggest two or three cuts this year, while others believe there could be just one.
The key factor is what happens with inflation and the economy.
The Bank of England’s Monetary Policy Committee (the group of expert economists who vote on what the base rate should be) aims to keep inflation under control.
The idea is that by increasing the base rate, the cost of borrowing increases and that reduces demand from consumers, households and businesses, which slows the economy.
In theory, this should eventually reduce consumer price index inflation, which is on track to decline but is currently still above the Bank of England’s 2 percent target of 3.2 percent.
Ups and Downs: This chart shows the last 40 years of base rate levels, ranging from the peaks of the 1980s and early 1990s to the declines of the 2000s.
Base Rate vs. Mortgage Rates
When the Bank of England changes the base rate, some mortgage rates will move, but not all.
Fixed transactions will remain at the same level until completed, base rate trackers will move by the same amount as the Bank’s change, and standard variable rates or other transactions linked to them will move by an amount decided by the lender.
The cost of fixed rate mortgages has risen substantially in recent years, driven by the Bank of England raising rates.
That period has seen two major spikes, one after Liz Truss and Kwasi Kwarteng’s ill-fated mini-budget and another due to inflationary panic in spring/summer 2023.
The market has calmed since then, but controlling expectations of rate cuts has led to a recent rise in mortgage rates.
Read our What’s Next for Mortgage Rates? Guide to find out the latest news on what is happening with rates.
Latest news on interest rates and mortgages.
Read our regularly updated guides for more information:
When will interest rates fall?
What’s next for mortgage rates and should you fix it?
Our Mortgages & Housing section also includes all of our latest articles on mortgage rates.
Savers benefit from higher rates – see the best savings rates in our independent tables.
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