When the Bank of England base rate falls, so does the interest you’ll pay on your mortgage. This means lower repayments each month, which could save you money and free up more of your budget.
On the other hand, if the base rate rises, your mortgage interest rate will too. This could mean your monthly payments go up. Plus, the extra money you pay would only cover the interest rate rise and wouldn’t clear more of your mortgage.
It’s also worth knowing that many tracker mortgage deals are equipped with what’s known as a ‘collar’. Lenders will add these to stop your repayments from going too low, even if the base rate drops below a certain percentage.