What does the cut mean for me?published at 12:06 British Summer Time
Michael Race
Business and economics reporter
It’s the question we all ask, but the answers depend a lot on your individual circumstances.
Broadly
speaking, borrowing money now will be slightly cheaper and returns on savings
will not be as high.
What about those who have a mortgage?
Mortgage rates are often one of the first things a
lot of people mention of when interest rates are decided, but to put it into
context, only a third of people have a mortgage.
And the vast majority of mortgage holders are on fixed deals,
so there’s no change for them.
Those looking to buy a home or coming to the end of a fixed
deal will likely be watching today’s news closely, but given the markets
expected a cut today, the reductions are typically priced in to fixed deals on
offer already.
People with tracker mortgages, which are loans that rack the
Bank’s base rate, could see an immediate reduction on monthly repayments. There
about 600,000 people who have one.
For example, the cut in rates means repayments on an average
standard variable rate mortgage of £250,000 over 25 years will fall by £40 per
month, according to financial information company Moneyfacts.
The impact on savings
When it comes to impact on savings, today’s decision will
spell “further misery”, according to finance expert at Moneyfacts, Rachel Springall.
Average rates across easy access and notice accounts have
been falling since the start of August 2024.
The financial experts suggest shopping around for the best
deal. “Switching savings accounts must become a regular habit to
ensure savers are not getting a paltry rate,” adds Springall.
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