The UK base rate is the interest rate at which commercial banks, such as Barclays and NatWest, borrow from the Bank of England.
In principle, when the base rate is lower, loans become cheaper for borrowers, as lenders typically adjust their rates based on the base rate. Likewise, the base rate often influences the interest rates set by banks on their savings account products.
Essentially, low interest rates tend to benefit borrowers but disadvantage savers.
Below is a graph showing the change in the Bank of England base rate since 1975.
Month
Base Rate
Change
01 Aug 2024
5.00%
0.25
03 Aug 2023
5.25%
0.25
22 Jun 2023
5.00%
0.50
11 May 2023
4.50%
0.25
23 Mar 2023
4.25%
0.25
02 Feb 2023
4.00%
0.50
15 Dec 2022
3.50%
0.50
03 Nov 2022
3.00%
0.75
22 Sep 2022
2.25%
0.50
04 Aug 2022
1.75%
0.50
16 Jun 2022
1.25%
0.25
05 May 2022
1.00%
0.25
17 Mar 2022
0.75%
0.25
03 Feb 2022
0.50%
0.25
16 Dec 2021
0.25%
0.15
19 Mar 2020
0.10%
0.15
11 Mar 2020
0.25%
0.50
02 Aug 2018
0.75%
0.25
02 Nov 2017
0.50%
0.25
04 Aug 2016
0.25%
0.25
05 Mar 2009
0.50%
0.50
05 Feb 2009
1.00%
0.50
08 Jan 2009
1.50%
0.50
04 Dec 2008
2.00%
1.00
06 Nov 2008
3.00%
1.50
08 Oct 2008
4.50%
0.50
10 Apr 2008
5.00%
0.25
07 Feb 2008
5.25%
0.25
06 Dec 2007
5.50%
0.25
05 Jul 2007
5.75%
0.25
10 May 2007
5.50%
0.25
11 Jan 2007
5.25%
0.25
09 Nov 2006
5.00%
0.25
03 Aug 2006
4.75%
0.25
04 Aug 2005
4.50%
0.25
05 Aug 2004
4.75%
0.25
10 Jun 2004
4.50%
0.25
06 May 2004
4.25%
0.25
05 Feb 2004
4.00%
0.25
06 Nov 2003
3.75%
0.25
10 Jul 2003
3.50%
0.25
06 Feb 2003
3.75%
0.25
08 Nov 2001
4.00%
0.50
04 Oct 2001
4.50%
0.25
18 Sep 2001
4.75%
0.25
02 Aug 2001
5.00%
0.25
10 May 2001
5.25%
0.25
05 Apr 2001
5.50%
0.25
08 Feb 2001
5.75%
0.25
10 Feb 2000
6.00%
0.25
13 Jan 2000
5.75%
0.25
04 Nov 1999
5.50%
0.25
08 Sep 1999
5.25%
0.25
10 Jun 1999
5.00%
0.25
08 Apr 1999
5.25%
0.25
04 Feb 1999
5.50%
0.50
07 Jan 1999
6.00%
0.25
10 Dec 1998
6.25%
0.50
05 Nov 1998
6.75%
0.50
08 Oct 1998
7.25%
0.25
04 Jun 1998
7.50%
0.25
06 Nov 1997
7.25%
0.25
07 Aug 1997
7.00%
0.25
10 Jul 1997
6.75%
0.25
06 Jun 1997
6.50%
0.25
06 May 1997
6.25%
0.31
30 Oct 1996
5.94%
0.25
06 Jun 1996
5.69%
0.25
08 Mar 1996
5.94%
0.19
18 Jan 1996
6.13%
0.25
13 Dec 1995
6.38%
0.25
02 Feb 1995
6.63%
0.50
07 Dec 1994
6.13%
0.50
12 Sep 1994
5.63%
0.50
08 Feb 1994
5.13%
0.25
23 Nov 1993
5.38%
0.50
26 Jan 1993
5.88%
1.00
13 Nov 1992
6.88%
1.00
16 Oct 1992
7.88%
1.00
22 Sep 1992
8.88%
1.00
05 May 1992
9.88%
0.50
04 Sep 1991
10.38%
0.50
12 Jul 1991
10.88%
0.50
24 May 1991
11.38%
0.50
12 Apr 1991
11.88%
0.50
22 Mar 1991
12.38%
0.50
27 Feb 1991
12.88%
0.50
13 Feb 1991
13.38%
0.50
08 Oct 1990
13.88%
1.00
06 Oct 1989
14.88%
1.13
08 Sep 1989
13.75%
0.13
04 Sep 1989
13.88%
0.04
31 Aug 1989
13.84%
0.09
25 May 1989
13.75%
0.87
25 Nov 1988
12.88%
1.00
25 Aug 1988
11.88%
1.00
08 Aug 1988
10.88%
0.50
21 Jul 1988
10.38%
0.50
07 Jul 1988
9.88%
1.00
24 Jun 1988
8.88%
0.50
10 Jun 1988
8.38%
0.50
03 Jun 1988
7.88%
0.50
17 May 1988
7.38%
0.50
08 Apr 1988
7.88%
0.50
17 Mar 1988
8.38%
0.50
01 Feb 1988
8.88%
0.50
03 Dec 1987
8.38%
0.50
04 Nov 1987
8.88%
0.50
23 Oct 1987
9.38%
0.50
06 Aug 1987
9.88%
1.00
08 May 1987
8.88%
0.50
28 Apr 1987
9.38%
0.50
18 Mar 1987
9.88%
0.50
09 Mar 1987
10.38%
0.50
15 Oct 1986
10.88%
1.00
23 May 1986
9.88%
0.50
18 Apr 1986
10.38%
0.50
11 Apr 1986
10.88%
0.50
19 Mar 1986
11.38%
1.00
15 Jan 1986
12.38%
1.00
26 Jul 1985
11.38%
0.50
11 Jul 1985
11.88%
0.50
19 Apr 1985
12.38%
0.50
28 Mar 1985
12.88%
0.50
20 Mar 1985
13.38%
0.50
28 Jan 1985
13.88%
2.00
14 Jan 1985
11.88%
2.38
23 Nov 1984
9.50%
0.25
19 Nov 1984
9.75%
0.25
05 Nov 1984
10.00%
0.50
17 Aug 1984
10.50%
0.25
16 Aug 1984
10.75%
0.25
09 Aug 1984
11.00%
0.50
08 Aug 1984
11.50%
0.50
11 Jul 1984
12.00%
2.00
06 Jul 1984
10.00%
1.12
29 Jun 1984
8.88%
0.18
10 May 1984
9.06%
0.50
14 Mar 1984
8.56%
0.25
07 Mar 1984
8.81%
0.25
03 Oct 1983
9.06%
0.50
10 Aug 1983
9.56%
0.12
09 Aug 1983
9.44%
0.12
14 Jun 1983
9.56%
0.25
13 Jun 1983
9.81%
0.25
14 Apr 1983
10.06%
0.25
13 Apr 1983
10.31%
0.25
15 Mar 1983
10.56%
0.44
12 Jan 1983
11.00%
1.00
26 Nov 1982
10.00%
0.87
02 Nov 1982
9.13%
0.25
01 Nov 1982
9.38%
0.25
12 Oct 1982
9.63%
0.50
30 Sep 1982
10.13%
0.12
29 Sep 1982
10.25%
0.13
28 Sep 1982
10.38%
0.12
27 Sep 1982
10.50%
0.13
27 Aug 1982
10.63%
0.25
26 Aug 1982
10.88%
0.12
25 Aug 1982
11.00%
0.13
24 Aug 1982
11.13%
0.12
17 Aug 1982
11.25%
0.13
16 Aug 1982
11.38%
0.12
04 Aug 1982
11.50%
0.06
02 Aug 1982
11.56%
0.07
30 Jul 1982
11.63%
0.12
29 Jul 1982
11.75%
0.06
28 Jul 1982
11.81%
0.13
26 Jul 1982
11.94%
0.12
21 Jul 1982
12.06%
0.07
13 Jul 1982
12.13%
0.12
12 Jul 1982
12.25%
0.25
09 Jul 1982
12.50%
0.13
08 Jun 1982
12.63%
0.50
20 Apr 1982
13.13%
0.13
19 Apr 1982
13.00%
0.13
16 Apr 1982
13.13%
0.12
10 Mar 1982
13.25%
0.38
25 Feb 1982
13.63%
0.18
22 Feb 1982
13.81%
0.07
22 Jan 1982
13.88%
0.12
21 Jan 1982
14.00%
0.13
20 Jan 1982
14.13%
0.12
19 Jan 1982
14.25%
0.06
18 Jan 1982
14.31%
0.07
04 Dec 1981
14.38%
0.18
25 Nov 1981
14.56%
0.07
09 Nov 1981
14.63%
0.43
06 Nov 1981
15.06%
0.07
28 Oct 1981
15.13%
0.13
12 Oct 1981
15.00%
1.00
15 Sep 1981
14.00%
1.31
25 Aug 1981
12.69%
0.69
11 Mar 1981
12.00%
2.00
25 Nov 1980
14.00%
2.00
03 Jul 1980
16.00%
1.00
15 Nov 1979
17.00%
3.00
13 Jun 1979
14.00%
2.00
05 Apr 1979
12.00%
1.00
01 Mar 1979
13.00%
1.00
08 Feb 1979
14.00%
1.50
09 Nov 1978
12.50%
2.50
08 Jun 1978
10.00%
1.00
15 May 1978
9.00%
0.25
08 May 1978
8.75%
1.25
12 Apr 1978
7.50%
1.00
09 Jan 1978
6.50%
0.50
28 Nov 1977
7.00%
2.00
17 Oct 1977
5.00%
0.50
10 Oct 1977
5.50%
0.50
19 Sep 1977
6.00%
0.50
12 Sep 1977
6.50%
0.50
15 Aug 1977
7.00%
0.50
08 Aug 1977
7.50%
0.50
16 May 1977
8.00%
0.25
02 May 1977
8.25%
0.50
25 Apr 1977
8.75%
0.25
18 Apr 1977
9.00%
0.25
12 Apr 1977
9.25%
0.25
31 Mar 1977
9.50%
1.00
21 Mar 1977
10.50%
0.50
10 Mar 1977
11.00%
1.00
03 Feb 1977
12.00%
0.25
31 Jan 1977
12.25%
1.00
24 Jan 1977
13.25%
0.75
10 Jan 1977
14.00%
0.25
29 Dec 1976
14.25%
0.25
20 Dec 1976
14.50%
0.25
22 Nov 1976
14.75%
0.25
07 Oct 1976
15.00%
2.00
13 Sep 1976
13.00%
1.50
24 May 1976
11.50%
1.00
26 Apr 1976
10.50%
1.50
08 Mar 1976
9.00%
0.25
01 Mar 1976
9.25%
0.25
09 Feb 1976
9.50%
0.50
02 Feb 1976
10.00%
0.50
26 Jan 1976
10.50%
0.25
19 Jan 1976
10.75%
0.25
05 Jan 1976
11.00%
0.25
29 Dec 1975
11.25%
0.25
01 Dec 1975
11.50%
0.25
17 Nov 1975
11.75%
0.25
06 Oct 1975
12.00%
1.00
28 Jul 1975
11.00%
1.00
05 May 1975
10.00%
0.25
21 Apr 1975
9.75%
0.25
24 Mar 1975
10.00%
0.25
10 Mar 1975
10.25%
0.25
17 Feb 1975
10.50%
0.25
10 Feb 1975
10.75%
0.25
27 Jan 1975
11.00%
0.25
20 Jan 1975
11.25%
0.00
Who determines interest rates?
The Bank of England’s Monetary Policy Committee (MPC) decides the fate of interest rates. They meet up every month and decide what the rates will be in the foreseen future.
Who forms the Monetary Policy Committee (MPC)?
The MPC is made up of 9 members, appointed by the chancellor for a three year term. Each member has a vote of equal weight.
Governor of the Bank
Two deputy governors
Chief economist
Marketing director
Four external members
So they decide how much interest I pay?
Yes, that’s right. Initially, before 1997, it was the Treasury that set interest rates, but Gordon Brown granted the MPC powers to set rates when Labour came to power in 1997.
The idea of handing the responsibility over to the MPC was to prevent governments from using interest rates as a political tool. Additionally, to give a degree of independence between the economy and political concerns.
However, the government has the right to instruct the Bank on what rate to set when needed.
What is the main purpose of the MPC?
The Monetary Policy Committees (MPC) main role is to control inflation according to the government’s inflation target, which is set each year in the Budget.
Why do interest rates increase?
Essentially, rates are increased to control inflation. The concern is that rising prices will fuel higher pay demands which could push prices yet higher in an inflationary spiral.
Rates are increasing to encourage saving and discourage borrowing because that’s what the bank of england think will keep inflation at a sensible level.
What is inflation?
Inflation is an increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every pound you own buys a smaller percentage of a good or service. Basically, things are getting more expensive.
How do interest rates affect the housing market?
Changes in interest rates affect mortgage rates, either instantly or in the future if you are in a fixed-rate or discount deal. Depending on which way the change went, your mortgage payments will either increase or decrease.
Interest rates can also affect property prices. If interest rates rise, the property market could lose its appeal because mortgages become more expensive, consequently having direct impact on property prices. Of course, the opposite affect could happen if interest rates lower.
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