The Bank of England has cut its base rate from 5% to 4.75%.

It was widely expected that the Bank’s monetary policy committee would cut the rate – the second decrease this year.

Hundreds of thousands of borrowers will see an immediate impact on their mortgage payments. 

That’s because about 600,000 mortgage holders in the UK have a tracker deal, when the interest rate moves in direct response to the Bank of England’s decision. A similar number have variable deals, and will have to wait to see how their own lender reacts.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “This is hugely positive for borrowers, with the Bank of England doing the right thing given inflation is below the 2% target. Those on base-rate trackers and variable-rate mortgages should see their monthly payments fall, and those savings will be gratefully welcomed by hard-pressed borrowers.

“While we are seeing a slight increase in mortgage rates, existing borrowers should engage with a whole-of-market mortgage broker approximately six or seven months prior to the current deal ending to lock into a new deal. Should mortgages rates rise further, you will be assured that something has been reserved but if rates fall, you can ask your adviser to reivew what is available nearer the time.

“New borrowers and first-time buyers should speak to a broker to run through the various schemes available to help them climb onto the property ladder, as well as how to make themselves as attractive as possible to prospective lenders. 

“We expect the MPC to continue on the anticipated path for base rate with further reductions in coming months, bringing further relief for homeowners and home ownership within the grasp of first-time buyers. However, what cannot be guaranteed is where rates end up, nor the pace it takes to get there. If you cannot afford to be wrong – that is, if rates were to rise you would struggle to pay the mortgage – then a fixed-rate mortgage usually makes sense.”

However, it is still uncertain whether the anticipated additional rate cut in December will now happen. 

The Bank will today issue a quarterly economic forecast which will reflect the anticipated impact of the Budget. This will give a clue as to whether a rate cut next month is off the agenda.

The Budget hiked the minimum wage and dramatic tax rises on employers’ national insurance contributions are expected to feed through to higher inflation. In the past 24 hours alone, JD Wetherspoon, which owns 797 pubs in the country, has said the budget will add £60m in costs next year, while M&S expects to take a £120m hit.