The Bank of England has cut the base rate from 5.25% to 5%. This rate is used by the central bank to charge other banks and lenders when they borrow money. This will have the effect of reducing rates for savers, but for those with, or hoping to attain mortgages it will come as some long overdue good news.
It’s the first base rate cut in over four years – the last time was in March 2020, when the rate fell to its all-time lowest level of 0.1%. The rate hit a 16-year high of 5.25% in August 2023 after 14 consecutive increases before being held at that level.
Lenders had begun to reduce mortgage rates anyway in the weeks leading up to last Thursday’s decision, which was the first time the Bank had cut interest rates in over four years.
NatWest, Virgin Money, Halifax, Leeds Building Society and Skipton Building Society have all made mortgage rate reductions in recent days.
Looking over to the US in the last couple of days there is a growing expectation that the FED in response to weak jobs data may start an aggressive rate cutting programme. As European banks often follow suit this could lead to further rate reductions happening even faster than previously expected.
