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Bank Base Rate explained and available help arranging mortgages based on Bank Base Rate

Bank Base Rate (BBR) is the rate of interest that is used as a basis for the varying interest charges it will levy on its customers. Bank Base Rate traditionally follows movement in the Bank of England Base Rate.

Here we take a look at Bank Base Rate and how Bank Base Rate Mortgages work, and discuss the various different margins that may be charged over Bank Base Rate. Plus we also discuss how we may be able to help arrange a mortgage based on Bank Base Rates.

What is Bank Base Rate?

Well, as we touched upon briefly above, the Bank Base Rate (sometimes abbreviated as BBR) is the interest rate used by Banks as a basis for the varying rates of interest charges it levies upon its customers. Traditionally, the Bank Base Rate will follow movement in the Bank of England Base Rate.

How do Bank Base Rate Mortgages work?

So, you could say that Bank Base Rate is the lowest rate at which the bank will charge interest, although there are likely to be few customers who will enjoy this rate alone! Instead the banks will use their Base Rate as a benchmark on to which it will add a "margin". Thus, if the Bank Base Rate is currently 6%, a lender may charge a customer with a straight forward mortgage application a margin of 1% over Bank Base Rate, i.e. 6% + 1% = 7%.

If the interest remains geared to Bank Base Rate, the rate of interest charged will follow any movements to the Bank Base Rate. Thus if interest rates rose by 0.5% from 6% to 6.5%, then this would have the effect of uplifting the customer's interest rate to 7.5%, i.e. 6.5% +1% = 7.5%. Similarly, a reduction in the Bank Base Rate of 0.5% would affect the customer's interest rate to 6.5%, i.e. 5.5% + 1% = 6.5%.

Why are different margins charged over Bank Base Rate (BBR)?

The margin levied will depend on several factors, and as far as mortgage borrowing is concerned, these will include:

  • Loan to Valuation (LTV)
    Thus, it is likely that 100% mortgages will have a larger margin over base rate applied to them, than if the loan to value was say 60%.

  • Adverse Credit History
    Customers having a history of adverse credit such as County Court Judgements (CCJ's), defaults or arrears, are considered as being a higher risk, and therefore the greater the risk the higher the margin over Bank Base Rate may be levied, for example:
    An Example of Bank Base Rate Margins that could be applied in adverse credit situations:
    Adverse Credit: Margin Above Base Rate:
    1 Satisfied CCJ: BBR + 1.5%
    3 CCJ's (not satisfied): BBR + 2.0%
    2 CCJ's plus 2 months mortgage arrears: BBR + 2.5%
    Discharged Bankrupt plus 4 CCJ's plus arrears: BBR + 3.5%
  • Employment Status
    If the customer is salaried they are likely to get a better rate of interest than a self-employed borrower who cannot prove their income by way of audited accounts.

Could Shire Direct help me arrange a mortgage based on Bank Base Rate?

In most instances, absolutely! But why not give one of our qualified mortgage advisors a call to discuss the options that may be available to you, and to get an in-principle decision.

You'll find our service to be friendly yet professional and not the slightest bit stuffy. Naturally, we'll carefully assess your requirements and needs along with your circumstances and aspirations and we'll come up with the most appropriate solution for you. So please don't hesitate to Contact Us if you would like to discuss your requirements, without obligation! Our mortgage advisors are available up to 10.00pm everyday, so call us now on Freephone 08000 282 281 or enquire online anytime, you'll be glad you did!

We trust we've managed to explain bank base rate to your satisfaction, and how it is applied to mortgage lending. Don't forget there is a wealth of mortgage related information available in our Mortgage Glossary.

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
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