For the fifth time in seven months 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, though they could be set to fall this year – 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 March 2024 is 5.25%, which meant there was no change. This keeps the rate at its highest level since April 2008.

source: tradingeconomics.com

This was the fifth pause at this rate, meaning we’ve not seen a change since August 2023. This followed a run of 14 consecutive increase moving from 0.1% in early December 2021, a total change of 5.15% percentage points. It was cut to a record low of 0.1% at the start of the pandemic in 2020.

Date of change	Rate	Change
March 2024	5.25%	No change
February 2024	5.25%	No change
December 2023	5.25%	No change
November 2023	5.25%	No 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

Will interest rates fall in 2024?

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. Years ago there was lots of 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. Another was that we’d have absolutely reached 6% overall during 2023. Again, it didn’t happen.

And this rollercoaster of predictions is a regular thing. Just a few months ago there was talk of five cuts to the base rate in 2024 starting this March. That obviously 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% – and we’ve been well above that for a while now.

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 (though in most cases that doesn’t mean prices fall, just get more expensive at a slower rate).

However, those rate hikes take time to filter down and for the inflation rate to – in theory – come under control. And if you keep increasing rates the danger is it pushes the economy into recession and cause hardship for borrowers, particularly those with mortgages.

So the majority thinking at the previous four meetings, stretching back to September, was to pause further hikes to see if enough had been done already.

Well, over the last few months it’s looked more and more likely that we’ll reach that 2% level quicker than initially thought, perhaps by the summer. The latest inflation figure of 3.4%, announced the day before the latest BoE meeting, was a little lower than anticipated – a good sign. However the rate for inflation in services is still high at 6.1% – something the bank will be keeping an eye on.

But if it carries on as predicted it paves the way for some base rate cuts this year. In fact, the two members of the committee who last time voted for an increase, were also now in favour of a hold (though only one voted for a reduction).

The current thinking is there will be three cuts down to 4.5% by the end of 2024, starting most likely in June or August to 5%, then two more before the year ends. Inflation is set to increase again later in the year, but remain around that 2% rate for the next three years.

But as ever, none of this is guaranteed! We could see a cut earlier, or later, or not at all.

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 March 2024 decision was eight in favour of doing nothing, and one wanted a 0.25% cut.

The next meetings will be on :

• 9 May 2024
• 20 June 2024
• 1 August 2024
• 19 September 2024
• 7 November 2024
• 19 December 2024

(full dates here).

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.

How it impacts your savings

The increases in the base rate were good news for savers. We’ve been earning very poor levels of interest, but that started to change in late 2021, and got better and better.

But that’s been changing since rates peaked in the autumn of 2023. Since then rates have generally been falling as banks price in the predicted cuts (they’re fast to pass these on, but slow to give us the increases).

There have been boosts to one-year fixes in recent weeks, up to 5.26% (there was a 5.28% until a few days ago), which is better than the top equivalent at the last BoE meeting of 5.17%. That’s down to those delayed predictions for the first cut, and no doubt some competition to be at the top.

There have more drops at the top of the easy access tables. Some providers have removed their products for new customers, while others have either announced cuts (Santander) or changed the rate to follow the base rate (Chase). So when those base rate cuts do come, those variable offerings will be cut too.

We also saw Nationwide drop their 8% regular saver down to 6.5%, though you can still get 7% from other banks.

Whether we’ll see more cuts is to be seen – it could be that if the falls we’ve already seen priced in faster drops than actually happen things stay relatively steady for a while. But don’t expect any new bumper deals to come along except for any potential boosts to ISAs at the start of the new financial year.

You can find the best paying options in our daily updated best buy tables.

How it impacts your mortgage

The fifth pause in rate increases will be frustrating news for homeowners who will be keen for cuts to push rates down.

Those on tracker rates will see no change in how much you pay. If you’re on the standard variable rate then it’s down to each mortgage lender, though they’re likely to stay the same. They can of course choose to hike or reduce it if they wish.

If you’re already on a fixed-rate mortgage (which most people are) 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 – deals will still going to be high compared to recent history.

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 around 2% to an average of 5.5% (according to Moneyfacts). That’s going to add a lot of money to your monthly repayments, let alone how much you pay back overall.

There have been some cuts in recent weeks, and Natwest reduced rates following yesterday’s inflation announcent But they’re all quite small since many lenders have already priced in a cut at some point, which they anticipated to come earlier than what it now looks like. So really until cuts happen we’re not likely to see much change.

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 incase rate do go up.

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.

Remember, last 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.

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.