Base Rate: The impact on your savings and mortgage

Changes to The Bank of England base rate may have you asking what this mean for your savings and mortgage. So we wanted to help you answer these questions.

But first, a little bit about base rate

The Bank of England bank rate, also known as base rate is set by The Bank of England’s Monetary Policy Committee (MPC), who usually meet eight times a year to review this rate. You can find the current base rate here.

Base rate is the most important interest rate in the UK, as it’s the rate the Bank of England charges banks and building societies to borrow money from them, including us.

When the base rate changes, either increase or decrease, the change is often reflected in the interest rates on savings, mortgages and loans. When base rate decreases it's to encourage spending rather than saving, as you earn less on your savings. But mortgage and loan payments usually become lower, if you're on a variable mortgage.

And when base rate increases, borrowing (loans/mortgages) becomes more expensive and discourages consumer spending due to less disposable income, but encourages consumers to save, as you to intend to earn more interest on your money.

You can find out how the Bank of England decides the base rate here. 

Below, you'll find more information below on what changes to base rate mean for your savings and mortgage with us.

 

Impact on your savings

What does a change to base rate mean for your savings?

The interest rate we offer on savings, is influenced by the base rate. If you have a variable rate savings account, such as our Instant Access Account, your interest rate could go up or down.

Following a change to base rate, we review our rates and decide how much of the base rate change to pass on to our savers and borrowers.

You’ll also notice that interest rates on new savings account may also change.

 

Will The Cambridge change their saving rates following a change to base rate?

As we have done previously following changes to base rate, we will look at our rates and make a decision about any changes, based on balancing the interest of savers against our borrowers, and taking into account any costs to the Society.

 

When will the new rates come into effect?

Changes to savings rates are usually implemented within 30 days of the base rate announcement. 

 

When will I know what my new savings interest rate is?

Where the change is a reduction in the interest rate and your account balance is £100 or more, we will notify you, by letter or email, of the change up to 14 days before we implement the new rate. 

 

What happens if I’m on a fixed rate savings account?

If you have a fixed rate savings account your rate will not change during the fixed rate period. The rate of the savings account you mature onto is likely to have a variable rate and may change by the time your account matures. But we’ll write to you before maturity to let you know your options and the interest rate.

 

Can I switch or close my savings account?

If you'd like to switch, close your account or transfer money into another savings accounts, you’ll need to look at the terms and conditions of your savings accounts to check  this and any other features.

If you’d like to switch to a new account with us, you can give us a call, send us a secure message (if you have online access) or pop into store. You can view all our current savings accounts here.

 

Impact on your mortgage

If you have a variable rate mortgage (this includes tracker and discounted rate mortgages) your mortgage rate could go up or down and it's likely that it will be affected by a change in the Base Rate. If your mortgage rate is changing, we’ll write to you before your next payment is due, letting you know your new rate and what your new monthly payment will be.

If you have a fixed rate mortgage, your rate and payments will not change during the fixed rate period. If you don't switch your mortgage deal when your fixed rate ends, you will revert to our standard variable rate or BTL variable rate mortgage.

 

What can I do if my payments are changing?

If you’re on a variable or discounted rate mortgage and you’d like the security of fixed mortgage payments, you may be able to switch to a fixed rate mortgage with us. Click here for more information on how to switch your mortgage, including important things to consider. You can book an appointment to speak with one of our Mortgage Team or call us on 0345 601 3344 and we can arrange an appointment for you.

If you’re worried about making your payments please contact us as soon as possible, as we can talk through the options available to you. You can find more information on how we can help you here. It’s important not to delay seeking advice; it’s widely available and free of charge from organisations like Money Helper.

 

What is your Standard Variable Rate?

You can view all of our current rates, including our Standard Variable Rate and BTL Variable Rate here

 

When will you be changing your mortgage rates?

Mortgage rates which are linked to the Bank of England Base Rate and are likely to be affected by a change in the Base Rate, such as our Standard Variable Rate, will change within one month following the announcement of the new base rate. 

 

When will you let me know what my new repayment amount will be?

If your mortgage is affected by the change in rates, you'll receive a letter once our new rates are confirmed to advise you of your new monthly payment.

 

I have a mortgage payment holiday arrangement in place – will this still stand?

If you have an agreed mortgage payment holiday in place this will continue and we’ll let you know of any changes to your repayments before your arrangement comes to an end.

 

I’ve recently applied for a mortgage with The Cambridge – will this affect my application?

If you’ve applied for a mortgage deal that is linked to our Standard Variable Rate or BTL Variable Rate, we’ll write to you to confirm your new rate and the amount you will repay each month.

 

Need a little more help?

If you have questions or would like to talk about your savings or mortgage, call us on 0345 601 3344 or pop into store and we’ll be happy to help.

If you’d like online access to your account(s), all you need is a mobile number and email address. And call us or pop into see us and we'll get you set up. You can then view your accounts at your convenience.