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The Bank of England Base Rate and your mortgage

What is the Bank of England Base Rate?

It is the official Bank Rate set by the Bank of England and it influences the interest rates set by Banks, Building Societies and other financial institutions.

If you are currently finding it difficult to pay your mortgage and believe you may be facing into financial difficulties please don't ignore the problem, there are ways we can help.

Your mortgage repayments

When the Bank Rate changes this could affect your mortgage payments.

If you have a tracker mortgage that directly tracks the Bank of England Base Rate, the interest rate we charge you will always move in line with changes to the Bank Rate.

If you are paying interest at our standard variable rate your mortgage payments are likely to be affected by a change to the Bank Rate. It's important to note that the changes we make to our standard variable rate may not change in line with or at the same time as the change to the Bank Rate, as other factors can also influence the rates that we set.

To help you understand how a change in interest rates might affect your monthly payment, use our Rate Change Calculator to get an idea.

FAQs >

WHAT HAPPENS WHEN THE BANK OF ENGLAND ANNOUNCE A RATE CHANGE?

If your mortgage is affected we will write to you to tell you about the change to your interest rate and monthly payment ahead of your monthly payment due date. We’ll change the interest rate on tracker rate mortgages with effect from 1st of the month following a Bank of England change.

IF INTEREST RATES GO DOWN

WHY IS MY MONTHLY PAYMENT GOING UP WHEN THE INTEREST RATE IS COMING DOWN?

Although the rate of interest you are being charged is reducing, your monthly payment may be going up because you now owe more than you did when we last recalculated your monthly payment or your balance hasn’t reduced by as much as it should have since we last recalculated your monthly payment. Alternatively, you may have arranged to underpay, or we may have added a cost or charge to your mortgage and you haven’t made arrangements to pay it off.

IF INTEREST RATES GO UP

WHY IS MY MONTHLY PAYMENT COMING DOWN WHEN THE INTEREST RATE IS GOING UP?

If you’ve made overpayments since the last time we recalculated your monthly payment, they will be included the next time your monthly payment is recalculated. This means your balance will have been reduced by the overpayment amount and your new monthly payment could be lower even though the interest rate is going up. Once we have done this, you will need to build up new overpayments before you can underpay.

WHAT IF PART, OR ALL, OF MY MORTGAGE IS ON A FIXED RATE?

If your mortgage is on a fixed rate of interest, then the interest rate on the part that is fixed won’t change. For most customers, the monthly payment won’t change either. When the fixed rate comes to an end, we will calculate a new monthly payment at the new variable interest rate that applies at that time.

I HAVE JUST ARRANGED TO TAKE OUT ADDITIONAL BORROWING. HOW WILL THE RATE CHANGE AFFECT ME?

Any additional borrowing you have arranged on a fixed rate of interest will not change as a result of a change to our variable mortgage rates.

If you have arranged additional borrowing at a variable rate any offer will show the interest rates that applied at the time the offer was produced. If we change the variable rate after the offer is issued, we won’t write to you until you complete. When you complete, the letter will contain a new monthly payment and interest rates that will apply.

I HAVE ARRANGED TO SWITCH TO A NEW FIXED RATE PRODUCT. HOW WILL THE RATE CHANGE AFFECT ME?

Any product switch you have arranged will be on a fixed rate of interest and this will not change as a result of a change to our variable mortgage rates. However, there may be part of your existing mortgage being charged at a variable rate. We will recalculate the monthly payment on any parts of the mortgage being charged interest at a variable rate and add these to the monthly payments on any fixed rate parts to give you a total new monthly payment.

I HAVE ARRANGED TO SWITCH TO A NEW FIXED RATE PRODUCT AND I DON’T WANT IT NOW. WHAT CAN I DO?

If you have arranged to switch to a new fixed rate product and the new rate hasn’t yet taken effect, you can contact us and tell us that you have changed your mind. If the new rate already applies, you can still change your mind as long as you tell us within five days of the new rate taking effect.

WHAT IF I FIND IT DIFFICULT TO PAY MY MORTGAGE?

If you are currently finding it difficult to pay your mortgage and believe you may be facing into financial difficulties please don’t ignore the problem, there are ways we can help.

For telephone line opening times, please read the information in our contact section. Calls may be monitored and recorded for security and training purposes.

Our tracker rate mortgages are linked to Bank of England Bank Rate (also known as Bank of England repo rate). Details of this rate can be found on the Bank of England website or in the Financial Times or other leading newspapers.

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© Birmingham Midshires

This site is intended for UK residents unless otherwise stated. Mortgage Loans will be made by Birmingham Midshires.
Birmingham Midshires is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh, EH1 1YZ.
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