Financial guru Martin Lewis has issued an urgent call to action for savers following a pivotal decision by the Bank of England to reduce interest rates. The central bank's Monetary Policy Committee voted to cut the base rate from 4% to 3.75% on Thursday, 18 December 2025, marking its lowest point in almost two years.
Why the Bank of England Acted
The move comes after inflation fell more sharply than forecast to 3.2%, edging closer to the Bank's 2% target. Governor Andrew Bailey indicated that future decisions would be a 'closer call', with policymakers narrowly backing this cut by a vote of 5 to 4. The reduction is expected to impact millions of borrowers and savers across the UK, with analysts speculating further cuts could be on the horizon.
Martin Lewis's 'Do It Today' Warning for Savers
In response, Martin Lewis delivered crucial advice, particularly for those with savings. He stressed that anyone considering a fixed-rate savings account must move immediately to secure the best deals before providers lower their rates.
'If you are looking immediately at getting fixed savings, do it today, do not wait,' Lewis stated emphatically on BBC Radio 5 Live. He explained that providers allocate a set amount of money at current rates, and once that pot is filled, new, lower rates are introduced.
He further warned that variable and easy-access savings rates are 'likely to drop in the next 2-4 weeks by a quarter of a per cent'. While top-tier accounts will see the decrease, the lowest-paying accounts may not change at all.
Impact on Mortgages, Loans, and Credit
The rate cut brings mixed news for homeowners and borrowers. Approximately 500,000 homeowners with tracker mortgages will see an immediate benefit, with a typical monthly repayment dropping by around £29. Those on standard variable rates should see a similar reduction within a month.
For those with fixed-rate mortgages, there will be no change until their current deal ends. New fixed-rate offers may see a slight decrease, but much of this cut was already anticipated by the markets. On loans and credit cards, the effect is minimal. Lewis noted that credit card APRs are already exceptionally high, averaging 24.9%, though we may see slightly longer 0% interest deals launched.
For new personal loans, the cheapest rates might see a marginal reduction, but this process takes time to filter through.
In summary, while borrowers may welcome lower costs, savers are urged to act swiftly to protect their returns in a declining interest rate environment.
