If you have a tracker mortgage, your interest rate will probably be directly pegged to changes in the Bank rate. But other mortgage rates are only loosely affected by changes in the Bank rate. This is one of the key factors you should consider when deciding whether to choose a fixed or variable rate mortgage.
The Bank of England rate is merely the overnight interest rate that banks would pay to borrow from the Bank of England. However, the rate at which banks lend to their customers will depend on a number of factors, such as the interest rates that banks charge each other, and the rates that they are paying on their customers’ savings accounts.
Hence, if the Bank of England rate starts to rise, it doesn’t necessarily mean that new mortgage rates will be higher. However, anyone who has an existing tracker mortgage which is linked to the Bank of England rate would see their monthly repayments rise immediately.