Bank of England base rate explained: how the MPC decision moves your mortgage and savings

What the Bank of England base rate is

The Bank of England base rate, formally called Bank Rate, is the interest rate that the central bank pays on the reserve balances commercial banks hold with it (Bank of England, The Interest Rate Bank Rate). It is the most direct lever the Bank of England has over short-term sterling interest rates: every other rate in the UK financial system, from interbank borrowing to high-street mortgages, takes its cue from where Bank Rate sits.

Bank Rate stood at 3.75% as of 2026-06-18, the level confirmed at the June 2026 meeting of the Monetary Policy Committee (BoE IADB).

Who decides Bank Rate

Bank Rate is set by the Monetary Policy Committee, known as the MPC (Bank of England, Monetary Policy Committee). The MPC has nine members: the Governor of the Bank of England, the three Deputy Governors for monetary policy, financial stability, and markets and banking, the Bank's Chief Economist, and four external members appointed by the Chancellor of the Exchequer.

The committee meets eight times a year, roughly every six weeks. Each meeting concludes with a vote on whether to raise, lower, or hold Bank Rate. The decision is announced at noon on the published meeting day, alongside the Monetary Policy Summary that explains the committee's reasoning. The full minutes of the meeting, recording how each member voted and the arguments raised, are published two weeks after the decision (Bank of England, Monetary Policy Summary and Minutes).

The MPC's statutory mandate is to maintain price stability, defined as a 2% Consumer Prices Index inflation target. Subject to that, it supports the government's economic objectives, including objectives for growth and employment.

How Bank Rate flows through to mortgages

Mortgage products respond to Bank Rate in three distinct ways depending on the product type.

Tracker mortgages move with Bank Rate directly. A tracker is quoted as Bank Rate plus a fixed margin: a "Bank Rate + 0.99%" tracker at the current 3.75% Bank Rate prices at 4.74%. If the MPC changes Bank Rate by 25 basis points at its next meeting, the tracker rate moves by the same 25 basis points on the date the change takes effect, usually the start of the following month.

Standard variable rate mortgages (SVRs) broadly follow Bank Rate but lenders are not contractually bound to pass on every move in full. SVRs tend to be reset by lender announcement after MPC decisions, and the timing and size of the change are at the lender's discretion. SVR borrowers typically pay a noticeably higher rate than tracker or fixed-rate borrowers and can move to a fixed or tracker deal at any time without an early-repayment charge.

Fixed-rate mortgages do not move with Bank Rate during the fix. New fixed-rate deals price off swap rates rather than Bank Rate itself: a swap rate is the cost in the wholesale market of swapping a stream of variable-rate cash flows for a fixed-rate stream over a given term. Lenders use the two-year swap rate to price two-year fixed deals, the five-year swap to price five-year fixed deals, and so on. Swap rates in turn reflect the market's expectation of where Bank Rate will sit on average over the relevant period, plus a risk premium. This is why a fixed mortgage deal can be repriced sharply even when Bank Rate has not changed: the market's expectation of future Bank Rate has shifted.

On a £250,000 repayment mortgage over 25 years, the monthly payment at a 3.75% rate is approximately £1,285; at 4.00% it is approximately £1,320; at 4.50% it is approximately £1,390. Calculate Your Mortgage Payment →

How Bank Rate flows through to savings

The same Bank Rate that determines what commercial banks earn on their reserves at the central bank is the floor from which they decide what to pay their own savers. Easy-access savings accounts, fixed-rate bonds, and cash ISAs all take their pricing cues from Bank Rate, though the pass-through is rarely one-for-one.

Easy-access rates tend to move more sluggishly than Bank Rate. Banks compete with each other on headline rates, but they are not obliged to pass on Bank Rate changes in full or on any particular timetable. Fixed-rate savings bonds price more like fixed-rate mortgages: their rates reflect the wholesale market's expectation of where Bank Rate will sit on average over the bond's term, not the spot Bank Rate today.

The practical implication is that the savings rate a household earns over a year is determined by the average level of Bank Rate during that year, the margin the chosen account charges below it, and how quickly the account provider repriced after each MPC move.

How Bank Rate is moving today

Bank Rate has been on a clear path through the post-pandemic cycle. The MPC cut Bank Rate to 0.1% in March 2020 to support the economy through the pandemic, then began raising it from December 2021 as inflation rose. The peak in this cycle was 5.25%, reached in August 2023 and held into mid-2024. From August 2024 the MPC began a sequence of cuts as inflation moved back toward the 2% target, reaching 3.75% by mid-2026 (Bank of England, The Interest Rate Bank Rate).

The committee's June 2026 decision held Bank Rate at 3.75%. The MPC has signalled that the pace of any further cuts will depend on the path of underlying inflation and wage growth.

Frequently asked questions

How often does the Bank of England change Bank Rate?

The MPC meets eight times a year. At each meeting it votes on whether to change Bank Rate. In a stable economy, Bank Rate can be held unchanged for many consecutive meetings; in an environment with rising or falling inflation, the committee may move at every meeting for an extended period.

What is the difference between Bank Rate and the Bank of England base rate?

There is no difference. "Bank Rate" is the Bank of England's formal name for the rate. "Base rate" is the everyday term used in the media and by commercial banks when they reference the same number.

Why does a fixed-rate mortgage move when Bank Rate has not changed?

Fixed-rate mortgage pricing is driven by swap rates, which reflect the market's expectation of where Bank Rate will sit on average over the fix period. When the market revises its expectation of future Bank Rate up or down, swap rates move and fixed-rate mortgage pricing follows, even if the current Bank Rate is unchanged.

When does my tracker mortgage rate change after an MPC decision?

A tracker mortgage typically reprices from the start of the calendar month following the MPC decision, though the exact date is set by each lender's terms. Your lender writes to you confirming the new rate and the date it takes effect.

What happens to my fixed-rate deal at the end of the fix?

At the end of the fix, the mortgage typically reverts to the lender's standard variable rate. The SVR is almost always higher than the fixed rate that just expired, so most borrowers either remortgage to a new fix or move to a tracker before the fix ends.

Compare Your Mortgage Payment at Different Rates →