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Samuel Phillips on how the interest rate rise could affect you

Helen, senior associate and head of residential property, reveals what the base rate rise means for your money.

Written by Rachael Nichol
Published 19.08.2023

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The Bank of England has just raised the UK’s base interest rate for the 14th time in August to 5.25%, the highest level since 2008.

The central bank has now raised its interest rates by 5% since December 2021. But don’t panic, you’re not alone.

When it comes to finances sometimes it can all seem so complicated and hard to understand. What matters the most is understanding what the rising base rate means for your money.

That’s why we caught up with Helen Griffiths, Samuel Phillips’ senior associate and head of residential property, to help guide us on how the interest rate rise impacts us.

How is the base rate rise going to help with inflation?

The theory behind increasing interest rates is that when they go up, less money is available to spend and when that happens, the rising cost of goods and services starts to slow. This effect is not seen immediately and can take some time for the results to show.


How is the Bank of England base rate set?

The Bank of England Monetary Policy Committee sets the base rate, reviewing it approximately every six weeks.


Variable rate mortgages

When interest rates go up, those who are on variable-rate mortgages and tracker mortgages can expect to pay higher monthly repayments. This is because the rate of interest on their mortgage varies in line with changes to the base rate. 

Fixed-rate mortgages

Those currently within fixed rate periods do not need to re-mortgage and may find they have to pay early repayment charges if they chose to re-mortgage within the fixed rate period. Those coming to the end of their fixed rate period should speak to a mortgage advisor to understand what deals are available with different lenders and how they can obtain the lowest rates.

Finding the best mortgage interest rates can be affected by several factors including mortgage lender, length of the mortgage and loan to value (the amount borrowed as a percentage of the property value).


The changing base rate has had quite an impact on the housing market. We have seen several clients needing to act quickly to secure new mortgage products as they have reached the end of their fixed rate term and cannot afford the variable rate with their current lender.

Some buyers may find it difficult to find affordable mortgage products due to the rise in interest rates, the effect being that they either decide not to purchase to save more money or they must choose lower-value properties.

If buyer demand slows, property prices could start to fall to attract more buyers. If a seller obtains a lower sale price for their property this could also impact the amount they have available to spend on a new property.


Rising interest rates can have a positive impact on savings however this is dependent on the bank or building society passing on the rate increases to customers. Again, there are many factors which affect this including which bank or building society the savings account is with, the type of account i.e. easy access vs fixed term and the amount the individual is able to save in any given period.



The base rate affects loans, debt and credit cards in a similar way to mortgages. If the loan or debt is subject to a variable interest rate, then this will change in line with changes to the base rate. If the loan or debt is subject to a fixed rate of interest, there shouldn’t be any change, but you should always read the terms and conditions carefully.



State pensions are unaffected by changes and are not linked to the base rate.

If you’re interested in finding out more about the interest rate rise and how this could affect your property transaction, Samuel Phillips Law can offer advice in the strictest of confidence. 

For more information, visit their website or Facebook page or call the law firm on 0191 232 8451.

Samuel Phillips Law Firm, Floor 5, General Buildings, 18–24 Grey Street, Newcastle upon Tyne NE1 6AE

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