The Bank of England cut base rates by 0.25% today, taking the official base rate down to 5% and marking the first reduction since 2020.
Mortgage and savings interest rates both heavily rely on these rates and some lenders took a proactive approach to the impending cut by reducing some of their rates in advance.
NatWest and Virgin Money led the charge with a number of reductions and a few new deals for certain customers.
Many experts looked optimistically on this change but also shared some causes for concern.
Ken James, Director at Contractor Mortgage Services, cautioned: “Rate cuts are always welcome but I do wonder if lenders are running out of steam, with small cuts all the fashion these days and big rate cuts left on the back burner.”
The expert claimed what the mortgage system truly needed to swing back into the favour of buyers was a 0.5% cut which would have taken the base rate below 5%.
He also noted that other lenders “may be slow to come through” updating their products after the rate cut.
Hannah Bashford, Director at Model Financial Solutions, shared a similar sentiment: “Although this is great, instead of tinkering around we could do with some decent reductions to reignite the market.”
Those on fixed accounts, both mortgage or savings, won’t be seeing any changes as a result of the base rate cut but the team at Money Saving Expert urged people to check what may happen to their account if their fixed period is coming to an end soon.
For homeowners, this cut also comes days after the fixed-rate mortgage deals dropped below 4% for the first time since April for those with at least a 40% deposit or equity through NatWest’s reduced accounts.
Savers can likely expect a dip in short-term accounts like easy-access which respond more quickly and drastically to base rate changes.
