Base Rate Cut To 4%

Base Rate Cut to 4%

The Bank of England has cut UK interest rates from 4.25% to 4%, the lowest level since March 2023.

The Bank of England interest rate can affect mortgage rates and interest rates on savings, as well as the speed at which prices change and how the jobs market performs.

What the rate cut means if you have a mortgage

The Bank of England's interest rate is what the central bank charges other banks that want to borrow money.

That then influences what interest rates those banks charge their customers for loans such as mortgages.

How the rate cut will affect mortgage repayments depends on the type of mortgage households have, and some could feel the difference quite quickly.

For those with a standard variable rate mortgage of £250,000 over 25 years, repayments will fall by £40 a month, according to financial information company Moneyfacts.

But most people with home loans have either a five-year or two-year fixed term mortgage. According to Moneyfacts, those interest rates have continued to fall, reaching 5.01% for five-year loans and 5% for two-year loans this month.

That will be little comfort to people coming off low five-year rates of below 3% soon, but welcome news for those re-fixing two-year rates which had been above 6% in August 2023.

Source: Rachel Clun - BBC News