What Is the Base Rate and Why Does It Matter?
The Bank of England base rate is the interest rate at which commercial banks borrow money from the central bank. It's the single biggest influence on the mortgage rates lenders offer to you as a homeowner.
When the base rate goes up, mortgage rates tend to follow — meaning higher monthly payments for those on variable or tracker deals. When it falls, borrowing becomes cheaper across the board.
Where Does the Base Rate Stand in 2026?
After a period of significant rate rises between 2022 and 2024, the Bank of England has been gradually adjusting the base rate in response to falling inflation. This has created new opportunities for homeowners looking to lock in a competitive fixed-rate deal.
The Monetary Policy Committee (MPC) meets eight times a year to decide whether to raise, lower, or hold the rate. Each decision is based on economic indicators including inflation, employment, and wage growth.
How Does the Base Rate Affect Your Mortgage?
The impact depends entirely on what type of mortgage you have:
- Tracker mortgages move directly with the base rate — if it drops by 0.25%, so does your rate
- Standard variable rates (SVR) are influenced by the base rate but set by your lender — they don't always pass on cuts in full
- Fixed-rate mortgages are unaffected during the fixed period, but the base rate influences what deals are available when you come to remortgage
What Should Homeowners Do?
If your fixed deal is ending soon, now is a good time to explore what rates are available. Lenders are competing for business and there are some strong deals on the market.
If you're on your lender's SVR, it's almost certainly worth looking at switching. The SVR is typically much higher than the best available fixed or tracker rates, and switching could save you hundreds of pounds a month.
The key is not to wait until your current deal expires — you can usually lock in a new rate up to six months in advance without any commitment.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.