When the Bank of England raises rates, millions of mortgage holders feel it — but not equally, and not all at once. Whether you're protected depends entirely on what type of mortgage you have.
Fixed rate mortgages — protected until the end
A fixed rate mortgage locks your interest rate for a set period — usually 2 or 5 years. During that time, rate rises don't touch you. Your payment stays exactly the same whatever the Bank of England does.
The catch: when your fix ends, you remortgage at current rates. If rates have risen significantly during your fixed term, your new payment will be higher than your old one — sometimes substantially. Many homeowners who fixed at 1.5–2% in 2020–21 faced a painful jump when they came to remortgage in 2023–24.
Tracker mortgages — follow the base rate directly
A tracker mortgage is pegged to the Bank of England base rate plus a set margin. If the base rate rises 0.25%, your mortgage rate rises 0.25% — immediately, usually from the next monthly payment.
On a £200,000 mortgage over 25 years, each 0.25% increase adds roughly £25–£28 per month. A 1% increase adds around £100–£110 per month. That doesn't sound catastrophic until you've had five increases in a year.
Standard variable rate — the most unpredictable
If you're on your lender's Standard Variable Rate (SVR) — what you drift to when a fixed or tracker deal ends — you're exposed to whatever rate your lender sets. SVRs typically track the base rate loosely but lenders can move them independently. SVRs are almost always higher than fix or tracker rates available to new customers. Being on SVR is rarely intentional — it's what happens when you don't remortgage.
The numbers: what a rate rise actually costs
Starting from a £250,000 mortgage over 25 years:
- At 3%: monthly payment £1,185
- At 4%: monthly payment £1,319 (+£134/month)
- At 5%: monthly payment £1,461 (+£276/month vs 3%)
- At 6%: monthly payment £1,610 (+£425/month vs 3%)
Each percentage point increase costs roughly £130–£160 more per month on a £250,000 balance. On a £400,000 mortgage, that's £200–£250 per additional percent.
What to do when rates are rising
If you're on a tracker or SVR and rate rises are straining your budget, switching to a fix locks in certainty — even if the fixed rate is higher than your current tracker rate, the certainty has value. If you have more than 6 months left on a fix, check what early repayment charges apply before switching.
If you're approaching the end of a fix, you can typically lock in a new fixed rate up to 6 months before your current deal ends — without paying an ERC. In a rising rate environment, doing this early makes sense.
Run your numbers
Use the mortgage calculator to see what your payment would be at different interest rates. Enter your current balance and remaining term, then try different rates to understand your real exposure before your next remortgage.