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Interest rates are up again

The Bank of England has increased the base rate to 4.50% here’s what it means for you, your savings and your mortgage.

The Bank of England has increased the base rate to 4.50% here’s what it means for you, your savings and your mortgage.

You may have seen the Bank of England has raised interest rates by a quarter of a basis point to 4.50% on Thursday (11 May 2023) as it continues the battle against high inflation.  

A seven to two majority on the central bank’s Monetary Policy Committee (MPC) backed the move, warning that the raise was needed to hit the Government’s inflation target of 2% which is still a long way from being achieved. 

But what does all this mean for you? I’ve been part of a panel of experts on discussing exactly that, so I wanted to give you some insight into the current situation and predictions on what the future holds.

What happens when the base rate moves?

The Bank of England (BoE) meets to decide the base rate 8 times per year. If the base rate changes, it’s good or bad news depending on your personal situation. Savings and mortgage rates are heavily influenced by what the BoE decides. So let’s take a look at them


First the good news, the 12 consecutive base rate rises have meant savers are getting much better interest rates on their money (unless you bank on the high street). This ends years of minimal returns for savers with challengers, fintechs and smaller banks leading the way. 

Looking back to December 2021 when the first base base rate rise in over 3 years occurred, many easy access savings rates were down at 0.1% (some even at 0.01%). Fast forward to today and you can get 3.71% on your money (That’s with Chip of course).

This latest rate rise should continue the trend of easy-access rates moving upwards and shorter term fixes following suit. Long-term fixed (3-5 years) accounts will most likely remain as they are, as banks and building societies price in falling rates in the years to come.


Mortgages always hit the headlines when the base rate moves because they’re the most sensitive to it.

The last few months have been challenging for anyone looking for a new fixed-rate deal, whether it’s to buy a first property or fix a new one that’s coming to an end - the reality is you'll be paying more for it. Those homeowners on tracker and variable rate mortgages will come off worse, seeing monthly payments go up again.

One positive is that while fixed rate mortgages remain higher than previous years, we are seeing some levelling out with providers already pricing in the interest rate rises to current deals. Providers may have to factor in cooling demand from buyers as well, keeping those fixed deals under control.

How high could interest rates go? 

While I can’t predict the future, it’s my opinion at the moment that inflation is simply too high to consider pausing or reversing interest rate rises for now.

The BoE has always said base rate rises to bring inflation under control so it may need to stay on this path for longer than predicted. Factors like food and energy prices are keeping the cost of living high - meaning that anything other than continuing to raise the rate may send out the wrong signals and undermine the fight against inflation.

That said, the BoE can’t ignore the fact that pressure on UK households (especially homeowners) is building, and continued rate rises may push the economy into recession. It’s a delicate balance.

On February’s base rate panel, I predicted that we’d hit a peak of 5% in 2023 and I’m going to stick to my guns on this one. If we do see a couple of further rate rises we may see the MPC voting to hold the base rate for a while to keep things stable.

Chip is leading the way

The landscape has changed dramatically over the last few years, so at Chip we launched the Chip Instant Access Account to take advantage of that. 

We built an instant access savings account that can move quickly, be reactive and reward our savers today, not tomorrow, in a market where others looked at each other or simply did nothing.

Since launch we’ve raised your interest rate 7 times and are proudly market leading - giving our Chip community the best easy-access interest rate in the UK.

We’ll keep our eyes on the market and while we can, we’ll aim to keep your rate the best around to get you the best return on your money. 

Chip isn’t just about a savings rate, we have a range of products and services built to build real long-term wealth to be your one place for all things savings and investing.

It's great to have you with us,