Well, that was quicker than most of us expected. 🏦
This morning the Bank of England lopped 0.25 percentage points off its base rate, taking it down to 4.00 %. It’s the fifth trim in 11 months and, if you’ve got a mortgage (or you’re about to apply for one), you’re probably wondering what it means for your monthly budget.
Below is a fast-and-friendly run-through of the winners, the maybes and the watch-outs – plus a reality check on how much cheaper new fixes are likely to get.
(Information-only content – we’ll happily introduce you to an FCA-authorised adviser if you want personalised guidance.)
1. Trackers & SVRs: Instant relief
If your loan tracks the base rate, the drop feeds straight into May’s payment (some lenders take an extra month). Rough sums:
| Balance | Cut in monthly payment* |
|---|---|
| £100 k interest-only | ≈ £16 |
| £200 k repayment (20 yrs left) | ≈ £26 |
| £350 k repayment (25 yrs left) | ≈ £46 |
*Rounded numbers – your lender will confirm the exact figure.
Got stuck on your lender’s Standard Variable Rate after a fixed deal ended? You’ll get the same 0.25 pp discount – but SVRs are eye-wateringly high right now (many > 7 %). Use the breathing space to shop around.
2. New fixed-rate deals: Small dribble, not a waterfall
Swap-markets and gilt yields priced in today’s cut weeks ago, so don’t expect headline-grabbing slashes. Expect:
- Best two-year fixes: drift from ~4.89 % towards 4.75 %.
- Best five-year fixes: ease from ~4.39 % towards 4.25 %.
Lenders tend to tweak in 0.05 pp increments; you’ll see the updated rates roll out over the next fortnight.
Pro move
Lock a deal now (most lenders let brokers “re-book” your product for free if rates fall before completion). That way you capture any further discount without losing your place in the queue.
3. First-time buyers: Marginally better maths
Stress-tests still drive affordability. Lower base rate = slightly lower stress rate, so calculators will loosen by a hair. Rough guide:
- £40–£60 pcm extra borrowing capacity per £1,000 gross income (varies by lender).
- 95 % LTV deals get priciest funding, so the biggest perk still goes to buyers with 10 %+ deposit.
4. Existing fixed deals: Sit tight or spring?
Fixed until 2026-27 on a sub-2 % COVID-era rate? Ride it out – you’re already winning.
Fix ends inside six months? Grab a new product; you can usually swap again if the market moves.
Tracker fan? If you’re comfortable with bumps, you just got cheaper repayments; but build a buffer – the vote was 5-4, so hikes aren’t off the table.
5. Three quick FAQs
Will savings rates dive tomorrow?
Easy-access accounts track base rate, so yes – dribs and drabs over the next month. Fixed bonds depend on banks’ hunger for cash, so move fast if you want current top rates.
Does the Bank plan more cuts?
The minutes called this a “finely balanced” decision. Inflation’s still sticky; another cut is possible later this year but far from guaranteed.
What about buy-to-let?
Lenders stress-test at a buffer (often 5.5–8 %). Today’s move may shave ~0.25 pp off the calculator – useful if you were marginal on rental coverage.
Ready for some personalised numbers?
We don’t dish out regulated advice here – instead we connect you (free) to an FCA-authorised mortgage broker who can:
- Compare your lender’s post-cut product-transfer with new-lender fixes
- Crunch tracker vs. five-year-fix break-even maths for your loan size
- Fast-track a Decision in Principle if you’re house-hunting
Important: This post is for information only. For tailored recommendations you must speak to a qualified adviser. We’ll happily arrange a no-obligation introduction.