Interest rates – Understand interest rates | Ulster Bank

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Understand Interest Rates

Your home may be repossessed if you do not keep up repayments on your mortgage

On the 2nd November 2017, the Bank of England base rate went from 0.25% to 0.5%.  It’s important to understand how interest rate change could affect you.

Bank of England Base Rate

What is the Bank of England Base Rate and who sets it?

 

The Bank of England (BoE) is the central bank of the UK. Base Rate is an interest rate set by the Bank of England’s Monetary Policy Committee. The Bank of England Base Rate is one of the most important interest rates because it tends to influence all the other interest rates, such as those set by banks, including mortgage, loan and savings rates and rates for businesses. 

The Ulster Bank’s Base Rate will align to the Bank of England Base Rate.

 

How could it affect you?

 

The Bank of England Base Rate is taken in to account as a factor when deciding the Ulster Bank base rate. Therefore, if the Bank of England Base Rate changes, your monthly payment may be affected if you hold a mortgage, loan or Savings product.  We will always notify you in advance of changes to any of our products so you have plenty of time to review your options.

Have a mortgage with Ulster?

Next steps

Check your mortgage type

Start by checking what type of mortgage you have, as this will determine whether a change to interest rates may impact you.

 

Fixed rate mortgage
This is a mortgage where your interest rate remains the same (fixed) for a set period of time.  During the fixed period, no matter what happens to rates generally, the interest rate on your mortgage will stay the same and your payments will not change.  However, after the term of the product comes to an end, the rate will revert to our Standard Variable Rate.

 

Standard Variable Rate (SVR) mortgage and Flexible Variable Rate mortgage
Our Standard Variable Rate is the interest rate we charge once your fixed or tracker deal comes to an end.  It's a variable rate so it can go up or down at any time.  When varying the rate, we consider a variety of factors.  If you are on our SVR, you are always free to choose a new fixed or tracker deal if you wish, however certain eligibility criteria will apply.

 

Our Flexible Variable Rate mortgage tracks the Ulster Bank Standard Variable Rate for the entire life of the loan and therefore if we vary our SVR your interest rate will also change.

 

Tracker mortgage
Your interest rate goes up or down in line with the Ulster Bank base rate.  This rate is a variable rate so it can go up or down at any time.  When varying the rate, we consider a variety of factors.   After the term of the product comes to an end, the rate will revert to our Standard Variable Rate (SVR).

After you have had a tracker rate for more than 3 months you have the track and switch option available to you if you wish. This means you have the option to move to a new fixed rate product without incurring an early repayment charge.

Consider a new deal

If you are considering a new mortgage deal and would like to view our current rates, you can view them online: 

 

 
  • If your mortgage was taken out before 2004, or if you don't have a mortgage with us right now, take a look in our mortgage section.

Think about overpaying

If you find that you have extra money, it might be worth seeing if you can make overpayments towards your mortgage. You can do this in a lump sum, or just by increasing the monthly payments.

 

Overpaying £100 a month on a £120,000, 25-year mortgage charging 4% will save you £15,000 in interest payments. It will also shave five years from your mortgage, clearing it in just 20 years. Doing this before rates rise means you have a smaller mortgage to be charged interest on so you could pay less overall.

 

Find out first if there are any restrictions to the amount that can be paid or whether you will incur an Early Repayment Charge. Also if you're deciding to end your deal while you’re within the deal period you may incur an Early Repayment Charge. Details of any Early Repayment Charge specific to your mortgage will be explained in your Mortgage Offer Document.

 

Once you know the specifics around your mortgage, use our Overpayment Calculator to see if you could pay off your mortgage quicker and save interest.

 

Overpayment Calculator

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