For the first time in almost two years there’s no change to the base rate – is that good or bad?



We’ve been in a period of rising interest rates since late 2021, and that could be good or bad for your finances. Here’s more on what to look for.
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What is the Bank of England base rate?
The interest rate set by the Bank of England (BoE) is known as the base rate.
The current rate, set on 21 September 2023 is 5.25%, which meant there was no change. This keeps the rate at its highest level since April 2008.
source: tradingeconomics.com
This ended a run of 14 consecutive increase moving from 0.1% in early December 2021, a total change of 5.15% percentage points in 20 months. It was cut to a record low of 0.1% at the start of the pandemic in 2020.
Date of change | Rate | Change |
September 2023 | 5.25% | No change |
August 2023 | 5.25% | +0.25 percentage points |
June 2023 | 5% | +0.5 percentage points |
May 2023 | 4.5% | +0.25 percentage points |
March 2023 | 4.25% | +0.25 percentage points |
February 2023 | 4% | +0.5 percentage points |
December 2022 | 3.5% | +0.5 percentage points |
November 2022 | 3% | +0.75 percentage points |
September 2022 | 2.25% | +0.5 percentage points |
August 2022 | 1.75% | +0.5 percentage points |
June 2022 | 1.25% | +0.25 percentage points |
May 2022 | 1% | +0.25 percentage points |
March 2022 | 0.75% | +0.25 percentage points |
February 2022 | 0.5% | +0.25 percentage points |
December 2021 | 0.25% | +0.15 percentage points |
March 2020 | 0.1% | -0.15 percentage points |
Have interest rates stopped increasing?
It’s always a guessing game, with analysts and economists predicting changes up or down ahead of each BoE meeting (and in between).
I can’t count how many times I’ve prepared articles based on a nailed-on change (according to those analysts) for it not to happen. Remember all the talk that we’d see negative interest rates? It didn’t happen.
Or how ahead of the June 2023 meeting the vast majority of experts expected the increase to be 0.25%, not the larger 0.5% that happened. And then this time, most people were saying there would be a 15th hike in a row to 5.5% – but it didn’t happen.
So always take the following with a pinch of salt. But here’s the current thinking.
The driver for changing rates right now is inflation. The Bank of England wants it to be 2% – but we’re well above that. Increasing interest rates is seen as the key (perhaps only) way to battle inflation, the idea being we’ll save more or have more expensive debts (like mortgages), leading to us spending less. This will force suppliers to lower prices, which in turn will see the inflation rate drop.
Going into this meeting the expectation was inflation would increase a little to 7.1%, leading to another 0.25% increase, which might have been the last one.
But the latest inflation figure of 6.7%, announced the day before the meeting, is down slightly from 6.8%. Core inflation also fell, from 7% to 6.2%. So in the end, the bank chose to stick – for this month at least.
In the minutes from the MPC for last month, the Bank predicted inflation to fall to 5% by the end of the year, due to energy price cuts we know are on the way. And reach 2% by Q2 of 2025. They say this is still on course. So that could mean there have been enough hikes.
But equally, there’s still the potential for another increase at a meeting later this year if inflation doesn’t drop at expected rates. The decision was won by a very narrow majority, so it only needs one person to change their mind in favour at November’s meeting for another increase to happen.
But if rates do go up again, it’s hopeful they won’t be by much – perhaps peaking at 5.5% rather than 5.75% or 6% as predicted in previous months.
However, what is likely is that even if rates have peaked at the current rate of 5.25%, the won’t be falling anytime soon. We still need to prepare ourselves for a new normal of 4% to 5% over the next few years.
When is the next interest rate decision?
The rate is set every six weeks or so by the Bank of England Monetary Committee, a group of nine people, with the majority vote deciding whether the rate goes up, down or stays the same. The September 2023 decision was five in favour of doing nothing, but four wanted a 0.25 point increase – so it was a close call!
The next meetings will be on :
- 2 November 2023
- 14 December 2023
- 2 February 2024 (provisional date)
- 21 March 2024 (provisional date)
- 9 May 2024 (provisional date)
- 20 June 2024 (provisional date)
- 1 August 2024 (provisional date)
- 19 September 2024 (provisional date)
- 7 November 2024 (provisional date)
- 19 December 2024 (provisional date)
Why it matters
The BoE rate is a large part of what high street and online banks and lenders use to inform the rates they offer. This means it will impact the cost of borrowing on things like mortgages, loans and credit cards, but also how much you can earn on savings.
Sometimes it’s a direct correlation if you have a product with a tracker rate – something that literally changes up or down in line with the BoE rate. In that case you’ll see an instant change.
On other products you might not see an instant change – if at all. So it pays to shop around to see if you can get a better deal.
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How it impacts your savings
The recent increases in the base rate have been good news for savers. We’ve been earning very poor levels of interest, but that started to change in late 2021, and has got better and better.
You can now get 6.2% on a one year fixed rate bond, 7% on a current account linked saver, 5.1% AER on an easy-access account and 8% AER on a regular saver (details on these and more here). A large part of these increases is down to improving base rates being passed on to customers.
With no change this month, that likely means very little change to rates. Some might move a little to match changes by competitors. Others might pull rates.
But it’s fixed rate accounts where we might see some more significant change. It’s likely the most recent improvements to some accounts will have already factored in an expected increase this month. But that didn’t happen. So perhaps they’ll reduce what they offer.
There have already been some cuts since – it’s only NS&I’s one year bond at 6.2% that reversed one year fixes falling below 6%.
And if no more hikes are to happen, it’s likely rates won’t get any higher – so it’s a good time to lock in if you can. Of course things can change!
Plus don’t forget that even these better rates we’re seeing (apart from a handful of restricted accounts) are well below inflation rates, currently at 6.7%. So there’s still a massive difference.
What about “consumer duty”?
Normally a base rate hike doesn’t mean the banks don’t have to do anything and many don’t usually make any changes. In fact between January 2022 and March 2023, the top 9 largest savings providers passed on just 28% of the base rate increases to their easy access accounts.
But since August, things have been a little different. New rules from the FCA, known as Consumer Duty, force financial organisations to treat customers fairly, and one for the first areas this targets is savings.
Bank are now under increased pressure to justify why a) they aren’t offering competitive savings rates, and b) why they’re not passing increases on (as they do to borrowers).
The key question of course will be, what is competitive? Banks at the top of the tables have tended to pass on some, if not all, of the recent hikes, but often that’s driven by marketing rather than the base rate. They want to be at the top of the table – either long term or just for some immediate fund raising.
These banks might argue they’re already offering more than fair rates, which means it will possibly be fine for other banks to offer less rather than match or beat the best ones.
So don’t expect suddenly to see every account offering 5.25%. We’ve already seen Natwest (fixed ISAs) and Santander (a 5.2% easy access account) offer able topping rates, but just for short periods before they were withdrawn.



The highest-paying savings accounts
- 5.25% AER current account from Barclays (limited to £5,000 deposit)
- 7% AER regular saver from First Direct
- 6.07% AER 1 year fix from Castle Community Bank
- 4.63% AER easy access from Shawbrook
Read more about these and the other best savings accounts in my best buys guide
How it impacts your mortgage
The pause in rate increases is good news for homeowners – at least compared to what another hike would have meant.
Those on tracker rates will see no change in how much you pay. If you’re on the standard variable rate then it’s hopeful they won’t change, though it’s down to each mortgage lender. They can of course choose to hike or reduce it if they wish.
If you’re already on a fixed-rate mortgage nothing will change – for now. Despite the pause this time, there’s still a big shock coming for those on a fixed term deal that’s due to end soon, or those looking for their first mortgage. But it could come to many more with longer fixes if rates do remain around the current level for a while.
Rates have increased so much in the last year and half. Despite falling a little after some particularly big ones in the summer (at one point around 7% was common), people coming off relatively cheap fixes could be moving from fixes below 2% to ones around 5%. That’s going to add a lot of money to your monthly repayments, let alone how much you pay back overall.
Earlier this summer the government also announced some short term guidelines, known as the Mortgage Charter, that most of the mortgage lender industry signed up to. Though most of the measures have been in place for a while, this formalised what was on offer.
So if you’re really struggling with repayments you can now do the following without it impacting your credit file for six months:
- Switch to an interest only mortgage for up to six months
- Extend the term of your mortgage (with the option to reverse this before six months pass)
Both will lower what you pay right now, but you will pay back more over the whole mortgage term, and potentially increase payments after that initial six months.
You can also agree a new fixed deal up to six months before the current deal ends, and you can ditch if if a better option comes along. Make sure you check to see if there are any charges for changing your mind for a different deal near the actual remortgaging date.
Normally the longer you fix for, the higher the rate. But right now the opposite is true. And the average five year fix is cheaper than a two year one according to Moneyfacts. So you might opt for certainty in the face of potentially larger rates later on.
Or you might want to hold firm on a tracker or variable rate, hoping short term pain at higher rates gives way to lower fixes in the medium term.
Better still is to speak with a mortgage broker who can advise on different strategies – though since no one knows what will happen this still won’t guarantee any savings.
And anyone who is really struggling to make their repayments, it’s important to talk to your lender to see if anything can be worked out – though bear in mind missing payments can impact your credit report.
If it’s impacting other essential spending, then see whether those companies can support reduced repayments. And if debts have built up, speak to a debt charity.
How it impacts other borrowing
Existing loans won’t change, though rates will likely increase for new ones. You might also see a change in the interest rate pushing up rates on car finance, overdrafts and credit cards. Balance transfer cards could also see shorter terms or increased transfer fees.
However with all of these it makes sense to go for 0% deals if you can get them, or to use your savings to pay for things or clear debts rather than take out new ones.
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If you have a child, consider some of the children easy access savings accounts for a higher savings rate. These include Kent Reliance (3.01% up to £25k), Bath Building Society (2.5% up to £5k), Penrith (2.45% up to £10k), Leeds Building Society (2.25% up to £1m). I’ve placed cash in all of those, beats having it all stuck in Chase or Virgin Money!