Martin Lewis has explained how much your mortgage will be impacted after the Bank of England‘s latest interest rate cut.
The central bank has announced the change in base rate from 5% to 4.75%.
It’s the second cut in the base rate this year – it came down from 5.25% to 5% in August. The BoE’s base rate heavily influences the cost of borrowing, including mortgages – a lower rate is supposed to encourage consumer spending.
Chancellor Rachel Reeves welcomed the cut but said she is “under no illusion about the scale of the challenge facing households” – while new Shadow Chancellor Mel Stride warned Labour to “not undo” the Tories‘ hard work
Money Saving Expert founder Martin Lewis took on X to explain what this means for mortgages and savings.
He told his 3.1 million followers: “UK Bank of England Base rate DOWN 0.25 percent points to 4.75 percent.
“What it means for mortgages & savings. Tracker rates will get cheaper by roughly £25 per month per £100,000 (variable & discount rates should drop too but don’t have to go by same amount).
“Your fixed rate mortgage will not change. Though the rate you can fix at may get cheaper (although as they’re based on predictions of future interest rate,some of this cut is already baked in).”
“Savings: Easy access rates are usually variable, so both cash ISAs and normal savings, will likely drop by around 0.25% points, though as it’s competitive at the top, some of the best may leave it a little later to drop.
“Your fixed rate savings will not change. Though the rate you can fix it at may be reduced (although as they’re based on predictions of future interest rate, some of this cut is already baked in).”
Bank of England Governor Andrew Bailey said rates were likely to “continue to fall gradually from here”, but cautioned they could not be cut “too quickly or by too much”.
He told the BBC: “The path is downward from here. We’ll see how quickly and by how much.
“I do emphasise the word gradual and the reason for that is there are a lot of risks out there in the world at large and also domestically.”
