The Bank of England has lowered the base interest rate by 0.25 percentage points, from 5% to 4.75%. This adjustment, the second rate cut in four years, is creating ripples across the mortgage market as lenders respond by revising their rates downward.
The Bank of England’s decision to reduce the base interest rate has led mortgage lenders, including Halifax, Lloyds Bank, and Metro Bank, to quickly lower their mortgage rates. This is good news for homeowners with variable-rate or tracker mortgages, as they will see an almost immediate decrease in their monthly payments. The reduction in rates means that mortgage holders with these types of loans will pay less interest on their outstanding balance, easing their financial burden.
For those on fixed-rate mortgages, this change won’t have an immediate effect; however, when their fixed period ends, they may be able to remortgage at a more favourable rate if rates remain low. First-time buyers and those looking to remortgage may find this a good opportunity, as lenders often compete by offering attractive rates following a central bank rate cut.
This rate cut also signals the Bank of England’s intent to provide some economic relief, which could have wider implications, potentially boosting consumer spending and confidence in the housing market.
Following this cut, customers with a range of other lenders—including Barclays, Coventry Building Society, Leeds Building Society, Nationwide, NatWest, Skipton, and Virgin Money—can also anticipate rate adjustments in the days and weeks ahead. These changes will likely benefit those with variable-rate mortgages first, with a reduction in their monthly payments as lenders pass on some of the savings from the lower base rate.
Santander and Accord Mortgages are among those who anticipated the move by cutting their fixed rates in advance, reducing them by up to 0.36%. For current and prospective borrowers, the reduction in fixed rates could present an opportunity to secure a more favourable rate on new mortgage products or when remortgaging.
The MPC’s decision to reduce rates is a clear attempt to support economic stability by making borrowing slightly more affordable. This could stimulate spending and investment, providing a boost to the housing market and possibly to the wider economy. However, how long these favourable rates will last depends on ongoing economic conditions and future MPC assessments.
The Bank of England’s decision to cut the base rate to 4.75% reflects its response to the recent inflation data. With inflation reported at 1.7% in September by the Office for National Statistics (ONS)—below the Bank’s 2% target—there’s less pressure to maintain higher rates. This rate cut marks a shift after a prolonged period of increases aimed at controlling inflation, which saw rates climb from a historic low of 0.1% in December 2021 to a peak of 5.25% in July 2023.
This rate adjustment may also encourage prospective homeowners and those looking to remortgage to explore new deals, as lenders could offer more competitive rates.
If you would like to speak to speak to our independent mortgage broker to discuss your current situation then please contact one of our offices where we can put you in touch.