After much speculation the Bank of England has indeed cut Base Rate to 0.25% - the first move in over 7 years and, until the EU referendum, one that very few would have foreseen. So what does it mean for mortgage holders?
Most obviously, any loans directly linked to Base Rate should see the full cut passed on, most likely at the start of next month. For some borrowers lucky enough to secure one of the very low tracker rates back in 2007/8 that could mean an interest rate as low as 0.42%.
More generally a mortgage tracking around 1.5% above Base Rate would see payments drop by roughly £1 per month for every £10,000 borrowed.
Those on lenders’ standard variable rates (SVR) will need to wait and see how much, if any, they benefit. Banks and Building Societies will also have an eye to their savers who’ve already been feeling hard done by for years, so it would be no surprise if relatively little of this cut get passed on borrowers.
Rest assured that we will keep a close on developments and update our SVR Watch as it happens.
But of course anyone currently sitting on an SVR should review their options in any case, since there’s a good chance there’ll be much better deals available. Our Best Buys and Rate Change calculator would be a good place to start.
Bank of England Reduces Base Rate