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What the Bank of England’s Base Rate Cut Means for You
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The Bank of England has lowered its base rate to 4.5% (down from 4.75%) – but what does that actually mean for you and your mortgage? Let’s break it down.
If you have a tracker mortgage
If your mortgage is a tracker mortgage, your monthly payments will go down because your rate directly follows the base rate. Since the base rate has dropped by 0.25%, your payments should reduce accordingly. If you’re unsure how much you’ll save, our mortgage advisers can help you crunch the numbers.
If you have a fixed-rate mortgage
If you’re on a fixed-rate mortgage, this change won’t affect your payments – at least not yet. Your interest rate stays the same until your deal ends. However, if you’re nearing the end of your fixed term, this could mean better deals are available when you remortgage. Our team can help you review your mortgage options and find the right deal for your situation.
A boost for borrowers?
Lower interest rates tend to make borrowing more affordable, which could be good news if you’re thinking about buying a home. When borrowing becomes cheaper, more people enter the housing market, keeping things moving. If you’re considering buying your first home, book a free initial consultation with one of our mortgage advisers.
Why has the base rate been cut?
The goal of this rate cut is to boost economic activity and keep the UK housing market strong. By making borrowing slightly more affordable, the hope is that more people will feel confident about buying, moving, or remortgaging.
What about savings?
A base rate drop could affect savers with many banks cutting their saving account rates. If you’re looking to review your savings and investments so they perform the best and you get the most out of them, a personalised financial plan may be a good place to start. Book a chat with one of our coaches now.
What should you do?
- Got a tracker mortgage? Expect a drop in your monthly payments.
- Got a fixed mortgage? Keep an eye on new deals if you’re nearing the end of your term.
- Thinking of buying? It might be a good time to explore your options.
- Wanting to make the most out of your savings? Get started with a financial plan by booking a chat with one of our coaches.
If you’re unsure about how this change affects you, speak to a member of our team. We’re here to help you navigate your mortgage, whether you’re looking to remortgage, buy your first home, or move up the property ladder.
Written by Terry Vincent, Senior Marketing Lead at Lifetime