The Bank of England Base Rate
The Bank of England Base Rate is decided by the Monetary Policy Committee, made up of 9 members who meet 8 times per year. You can find out more about the MPC on the Bank of England website. Changes to the Base Rate could affect your mortgage payment.
Whether you will be affected by a change to Base Rate depends on the type of mortgage that you hold.
Fixed – people with fixed rate mortgages will be unaffected by any Base Rate change whilst they are still in the fixed rate period. The interest rate and repayment amount will remain the same. After the fixed rate period ends the mortgage will automatically move to our Standard Variable Rate, unless you have then chosen to take out one of our exclusive loyalty mortgage products.
Tracker – people with a tracker rate mortgage will see a change to their interest rate, and their repayments will be recalculated. Tracker mortgages are calculated using the Base Rate plus a pre-set percentage rate, so the change will depend on the terms of the individual mortgage.
Variable or Standard Variable Rate (SVR) – this rate is set by each individual financial institution, so will not be affected by any change to the Base Rate. However you should be aware that a variable rate can change at any point in time.
Discount – this is a type of variable rate mortgage and is calculated using our Standard Variable Rate (SVR) minus a pre-set percentage rate. As with variable rate mortgages the rate is not directly affected by changes to the Base Rate but can change at any point during the mortgage term.
To make sure you are prepared for any change in rate we recommend that you check your Key Facts Illustration, European Standardised Information Sheet or Mortgage Offer for the individual terms of your mortgage. It is important that people who have a tracker or variable rate mortgage are prepared for an increase to their mortgage payment if the Base Rate increases. We advise checking now how much a rise in your mortgage interest rate could affect your repayments – use our monthly payment calculator http://www.ibs.co.uk/mortgages/monthly-repayments-calculator to calculate how much your monthly repayment could rise if your interest rate increases.
If you would like to review your mortgage please speak to one of our Mortgage Consultants on 0330 123 0773 (local rate) . They will be able to talk through the terms of your mortgage and answer any questions you may have. If you wanted to transfer your mortgage to a different product there could be a charge for this – this will be detailed in your Key Facts Illustration and Mortgage Offer, and our Mortgage Consultant will fully explain this to you before changing your deal.
If you are worried about not being able to pay your mortgage, or are experiencing difficulties, please speak to us as soon as possible. Our advice team are here to help you and will work towards finding a solution. Call us direct on 01473 278511 (local rate) so we can fully understand your requirements and explore the options available. It is important that you take advice from trusted sources, so we recommend that you contact us in the first instance. We also recommend you seek independent advice from the Money Advice Service www.moneyadviceservice.org, Step Change Debt Charity www.stepchange.org and the Citizens Advice Bureau www.citizensadvice.co.uk.