Bank of England Base Rate rise

On Thursday 2 November 2017, the Bank of England increased the Base Rate of Interest by 0.25%. This means the Base Rate is now 0.5%.

If you are a customer with a Bank of England Base Rate Tracker mortgage or loan, your interest rate will increase by 0.25% in line with the Terms & Conditions of your account.

We are also increasing our Standard Variable Rate (SVR) by 0.25%.

This change will take effect on either 1 December 2017 or 1 January 2018 in line with the Terms & Conditions of your account. We will confirm the date when the new interest rate will apply when we write to you.

If you are affected by an interest rate change, we will write to you before any change to the interest rate or monthly payment that applies to your account. This letter will confirm both the date when the new interest rate will apply and the specific impact on your monthly payment. Until we send a letter to you, there is no need for you to take any action.

Please find answers to a number of customer questions below to help explain the potential impact of the interest rate change on your mortgage. Or, to see how your monthly payment might be affected, try our easy-to-use Rate Rise calculator.

Please read this information before contacting us with a query.

Customer Questions & Answers

Why is my interest rate changing?

Following the Bank of England’s decision to increase the base rate to 0.5%, we have increased some of our mortgage and loan interest rates.

Will my interest rate change?

If you are a customer with a Bank of England Base Rate Tracker mortgage or loan, your interest rate will increase by 0.25% in line with the Terms & Conditions of your account.

We are also increasing our Standard Variable Rate (SVR) by 0.25%.

What will my new interest rate and monthly payment be?

We will write to you before any change is made to your mortgage or loan interest rate to confirm the specific impact on your monthly payment. There is no need for you to do anything before this letter arrives. To see how your monthly payment might be affected now, you can try our easy-to-use Rate Rise calculator.

The impact of the interest rate change on your monthly payment will depend on a number of factors, such as the type of mortgage or loan you have, the current balance and remaining term.

When will my interest rate and monthly payment change?

For the majority of customers this change will take effect from 1 December 2017, although for some NRAM accounts the change will take effect from 1 January 2018.

If you are a customer with a Bank of England Base Rate Tracker mortgage or loan, your interest rate will increase by 0.25% in line with the Terms & Conditions of your account.

We are also increasing our Standard Variable Rate (SVR) by 0.25%.

Do I need to do anything now?

You do not need to take any action at this stage and should continue to make your monthly payments as usual.

We will write to you ahead of any change to your interest rate or monthly payment. This letter will confirm both the date when the new interest rate will apply and the specific impact on your monthly payment. Until we send a letter to you, there is no need for you to take any action.

What if I am struggling to afford my monthly payments?

If you are worried about making your monthly mortgage or loan payments, you should contact us immediately. The sooner you speak to us, the more we can usually do to help. We will always consider your personal circumstances and be fair and considerate at all times.

Alternatively, you can visit our Personal Support section for details of how we can help and details of a number of independent organisations offering free support and advice who can help you keep your finances on track. They provide impartial information and support if you are experiencing (or anticipate) financial problems.

Can I fix my interest rate or change to a better deal?

Since nationalisation, we have been closed to new business so are unable to offer any new deals, such as fixed rates, to customers. However, our online 'DealFinder' tool can help you search the market to find and compare mortgages from other lenders. Visit DealFinder.

What if my account is already in arrears and I am behind with my payments?

This depends on the method you use to make your payments and whether you are currently repaying your arrears with an additional amount each month as part of an agreed payment arrangement.

If you do not pay by Direct Debit, you need to arrange to change the amount you pay.

If you are unsure what to do, or think you may struggle to meet either your regular monthly payment or the additional arrangement amount, then please contact us immediately so we can try to help you. We will always consider your personal circumstances and treat you with fairness.

Why might my new monthly payment be different to what I expected?

There are a number of factors that can affect your monthly payment when an interest rate change occurs, so your new monthly payment amount may differ from your own calculations.

Unless you have recently asked us to recalculate your monthly payment, the amount due may change for a number of reasons, for example where you have:

  • incurred any additional fees and charges;
  • taken a payment holiday;
  • not paid ground rent/service charges and we have paid these on your behalf;
  • made increased monthly payments for any reason;
  • missed any monthly payments for any reason.

The impact on your monthly payment may be exaggerated if you only have a short outstanding term remaining on your mortgage or loan.

What if I’m making overpayments?

Every overpayment reduces the outstanding balance on your mortgage or loan (dependent on how the overpayment has been applied), but does not alter the remaining term. Your new monthly payment will be calculated by applying the new interest rate to the lower balance over the existing remaining mortgage term.

If you are comfortable with the new total monthly payment amount quoted in your letter, then you do not need to contact us and you can simply continue to overpay by the same amount as you were before the interest rate change. If you wish to change the amount of your overpayment, please contact us.

What if I'm in the process of making changes to my mortgage or loan?

There are a number of changes you can make to your mortgage that are unaffected by this rate change, such as 'Power of Attorney' and 'Consent to Let'. If you are in the process of making such changes, you do not need to take any action as a result of the rate change.

However, if you are redeeming (closing) your account, you should ensure that you make the monthly payments quoted in the letter we will send to you until your account with us is fully repaid. Similarly, if you have recently requested a redemption statement, you should bear in mind that any figures quoted may now need to be recalculated following the interest rate change. Please contact us if you need to request a new redemption statement.

Also, if you have received a recent Change of Parties or Porting offer, we will provide a revised mortgage illustration.

If you are unsure about anything, please contact us.

What should I do if some or all of my payment is funded by the Department for Work and Pensions (DWP)?

If you claim Income Support, Pension Credit, income-related Employment and Support Allowance or income-based Jobseeker’s Allowance, the DWP will normally pay at least some of the interest on your mortgage, as long as you took the mortgage out to buy your home.

Support for Mortgage Interest (SMI) is paid at a standard rate set by the government, and is not based on the interest rate that you actually have to pay. You remain responsible for paying the difference between any DWP contribution and your total monthly payment and should make any necessary changes to your payment.

For more information about SMI, including the current SMI rate, visit the dedicated pages on the Government.uk website.

If you are worried about affording your mortgage each month, please call us as soon as possible.

What support is available for landlord borrowers?

If you have a Limited Company mortgage or a total of five or more buy-to-let accounts with NRAM, Bradford & Bingley or Mortgage Express, our specialist Portfolio Relationship Managers are available to support you. To speak to a member of the team please call us on 0330 159 1928* (Mon-Fri 9am-5pm) or visit our Portfolio Landlord section for more information.