Mortgages  >  Advice   >  Interest Rates   >  Bank of England

Compare Mortgage Quotes Today

Remortgage advice
Let expert advisors find the best remortgage product for you.
First time buyers
Read our free guides and compare prices in our independent first time buyers section.
Need help?
Mortgages advice services provided by L&C
0844 776 1076
Lines open 9am-8pm Mon-Thurs 9am-5:30pm Fri & Sat 10am-4pm Sunday

Bank of England

The Bank of England is the institution that sets interest rates in an attempt to control inflation and deflation and to maintain a stable financial system.

One of the central purposes of the BoE is to sustain stable prices and confidence in the currency.

Decisions on interest rates made by the independent Monetary Policy Committee are supposed to follow government inflation targets and should in theory lead to stable prices; however the current economic downturn has resulted in interest rates decreasing to historically low levels in an attempt to maintain a certain level of consumer spending and in turn prop up the country’s financial system.

Interest rates are revised each month, with the decision to increase, maintain or decrease made on the first Thursday.

The Monetary Policy Committee changes interest rates depending on levels of inflation and deflation. These are affected by a number of things including consumer demand, costs of labour and materials.

The UK as a global enterprise needs to uphold a constant rate of inflation in order to sustain competitive prices for the products which are sold worldwide. Therefore the role of the Bank of England as a regulator for interest rates is an essential tool for maintaining economic success and stability within the country and for the country in a global context.

Currently interest rates are at an all-time low as a result partially of inflation from recent years but more significantly as a result of banks over stretching themselves and not saving sufficient liquidity levels.

This essentially means that UK banks, similar to those throughout the rest of the world, have been lending out as much money as possible particularly in the real estate sector, in an attempt to make giant profits through interest.

However, financial systems hadn't accounted for borrowers who were unable to meet repayments. This, in addition to the damaged housing markets, has left major margins between outstanding debts and money coming in.

By reducing interest rates, the government is hoping to reduce monthly mortgage repayments as well as decreasing mortgage and refinance rates for borrowers.

This will supposedly free up excess funds to increase consumer expenditure in the long run and therefore rebuild the economic system.

Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.79% 2 years 4.99% 5% APR 75% £795
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% Nil

Meet the Team