2 min read
Definition
The base rate is the interest rate set by the Bank of England. It is the anchor for much of the cost of credit in the UK — variable-rate loans are often priced as "base rate plus a margin", so when the base rate moves, those repayments move with it.
Why it matters
On a variable-rate loan, a rise in the base rate raises your repayment, which is why stress testing a variable loan against a rate rise matters. A fixed rate is insulated from base-rate moves.
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