The Bank of England has finally cut its base interest rate from 5.25% to 5%, marking the first reduction in over four years. The decision brings relief to homeowners on tracker mortgages, who will see annual payments drop by an average of £340, according to UK Finance.
Those on standard variable rate (SVR) mortgages could see monthly payments fall by £14.50 if lenders pass on the full cut. However, the reduction does little to reverse the impact of 14 rate hikes since 2022, which pushed borrowing costs to a 16-year high.
Bank Governor Andrew Bailey cautioned against expecting rapid further cuts, stating, 'We need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much.' Experts predict the base rate may eventually settle around 3.25%, well above the sub-1% levels seen in the 2010s.
Matt Smith, a mortgage expert at Rightmove, noted that while the cut signals a downward trend, mortgage rates are unlikely to fall drastically. 'This sets us up for hopefully further cuts to come,' he said, but warned that rates will likely settle at higher levels than previously.
