What the Bank of England’s Interest Rate Cut Means for Mortgage Borrowers

Nov 07, 2024By Matthew Pigrome

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As expected, the Bank of England's Monetary Policy Committee (MPC) announced a base rate cut on 7 November, lowering it from 5% to 4.75%. This shift marks a crucial moment for mortgage borrowers, property buyers, and investors across the UK, as the Bank responds to changing economic conditions.

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Why the Rate Cut?

This decision follows a promising drop in inflation, which fell below the Bank's target of 2% in September for the first time in over three years. The MPC had held the base rate steady at 5.25% for more than a year, a level not seen in 16 years, as it worked to bring down persistently high inflation. This recent reduction signifies that inflationary pressures may be stabilising, allowing the Bank to ease rates slightly.

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What Does This Mean for Mortgage Borrowers?

The cut to 4.75% impacts different types of mortgage holders in various ways:

  1. Variable-Rate and Tracker Mortgages
    For those on variable-rate or tracker mortgages, the impact could be felt relatively quickly. Mortgage payments on these products usually fluctuate in line with the Bank’s base rate, so borrowers may see slight decreases in their monthly repayments.
  2. Fixed-Rate Mortgages
    If you're on a fixed-rate mortgage, the rate cut won’t impact your payments until your current term ends. However, today’s shift could mean that future fixed-rate offers may come at slightly lower rates, benefiting those who are approaching a remortgaging period.
  3. First-Time Buyers and Property Investors
    Lower rates generally translate to more favourable borrowing conditions, which could be welcome news for those considering entering the property market. With slightly lower interest rates, buyers may be able to access more competitive mortgage deals, potentially easing the path to homeownership.

What’s Next?

This rate cut signals a possible shift towards a period of more stable and potentially lower rates after a year of high levels aimed at tackling inflation. However, economic conditions can still change quickly, so it’s essential to stay informed. 

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Need Guidance?

At Mortgage321, we know that changes in the base rate can feel overwhelming, especially when it comes to decisions about your mortgage. Our team is here to help you navigate these changes and find the best mortgage options tailored to your needs. Whether you’re considering remortgaging, buying a property, or simply want to understand what this rate cut means for you, don’t hesitate to reach out to us.

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Phone: 01255 440142
Email: [email protected]
Our office hours are Monday to Saturday, 9 am to 8 pm. 

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