What does Variable rate mortgage mean?

When you contract a mortgage which is of variable rate type, this means that the variable rates are subject to the lender’s standard variable rate. Your mortgage rates will oscillate in concordance with the oscillations of the standard rate. Furthermore, the standard rate of the lender is always subject to what rate the Bank of England dictates.

The Bank of England is the guiding point for the rest of the financial institutions in terms of rates, so your lender might set a variable of 1-3% exceeding that of the Bank of England. However, when the base rate dictated by the Bank of England drops, that doesn’t mean your mortgage rates will also drop.