The Bank of England has just nudged the base rate down from 4.25% to 4%, with five members of the Monetary Policy Committee voting for a cut, narrowly delivering one.
While a 0.25% cut might not sound dramatic, it could make a real difference to borrowers – if they play their cards right.
Whether you’ve got a mortgage, lingering credit card debt or plans to borrow in the near future, this is your signal to take a closer look at your finances.
Let’s start with mortgages. For anyone on a tracker mortgage, today’s decision is good news as their mortgage rate will follow the base rate down.
Though those on fixed rates won’t benefit, if you’re currently looking to buy your first home or are due to remortgage soon, now’s the time to explore your options as mortgage rates could well start to edge down further in the days and weeks ahead.
In recent weeks some major lenders have been trimming their rates and this decision by the Bank of England could give them more confidence to do so.
However, rates may not dip much, as the vote was close and some lenders may already have factored this into their mortgage pricing — but further mortgage rate cuts are definitely on the table.
If you’re coming off a five-year fixed rate that you took out in 2020 when rates were ultra-low, today’s decision could slightly alleviate the pain when you switch onto a new rate.
Over the course of a two-year or five-year fixed rate mortgage term, which most Brits opt for, the savings from even slightly lower mortgage rates can rack up into the hundreds or even thousands of pounds.
If you’ve already secured a mortgage rate but haven’t completed yet, either speak to the lender directly or get a broker to do so on your behalf as better rates may crop up.
Your lender is highly unlikely to get in touch with you if they do launch a lower rate on the back of today’s rate cut so being proactive is key.
If you’re juggling credit cards, overdrafts and other expensive borrowing, now could be a chance to consolidate at slightly better rates.
A personal loan with a lower interest rate, or a well-timed balance transfer, could save you a lot in interest – and simplify your repayments at the same time.
The big message here? Don’t dismiss a 0.25% cut as insignificant. In the world of finance, these small moves can add up to big savings if you’re paying attention.
It’s about being proactive, not reactive. Review your mortgage, revisit your debts, reconsider your borrowing plans. This is a great moment to tidy up your financial strategy and make your money work harder for you.
Because let’s be honest, while we can’t control the markets, we can absolutely control how we respond to them. And right now, smart borrowers have a window of opportunity to get ahead.
