Mortgage Rates Vs BoE Base Rates - Help to Understand

GoldenShadow

Hi

Growing up people referred to the awful interest rates on mortgages, but I wondered if someone could help me to understand a bit more, I haven't managed to source the info elsewhere.

Am I right to think, that the correlation is, base rate goes up, so mortgage rates go up, but by how much will depend upon the lender in question?

Theoretically, if the base rate ended up at 10%, would all lenders be offering rates at more than 10%? What would be the consequence of them offering less than 10%?

Also, does anyone know (historically) how quickly mortgage rates tend to go up? I know how quick and slow the base rate has varied from past data, but unsure if lenders literally shadow this exactly?

Thanks to anyone who can help :beer:

ACG

Lenders use money from savers and money from other lenders that they "buy in". If the rates they are having to pay to get that money goes to 10% then yes they would need to charge in excess of 10% to make their money back.

If you have tied in to a 10 year mortgage and in 5 years rates shoot up, then you know you are covered for the next 5 years.

If the base rate/libor goes up then so will the deals on offer, the amount will vary from lender to lender depending on their appetite to lend.