The Bank of England’s monetary policy committee has announced its latest base rate decision.

The rate has been cut today from 4.75% to 4.5% – it’s the lowest base rate since June 2023.

Some 630,000 households have tracker mortgages so will see an immediate impact – a cut of about £29 a month. A similar number of households have variable rate deals, and lenders will now be expected to cut their in line with the BoE. 

Fixed-rate deals do not change immediately, but the expectation of further rate cuts could lead to new borrowers, or those renewing existing loans, getting a better deal.

In response Sarah Thompson, managing director of Mortgage Scout, says: “Lenders like Barclays have already responded, cutting rates on selected mortgages and introducing new deals for energy-efficient homes. Falling swap rates, which influence fixed-rate mortgage pricing, suggest a broader trend towards improved lending conditions, with five-year swaps dropping from 4.12% to 3.92% in recent weeks.

“While this rate cut is a step in the right direction, affordability remains a key concern.”

Alpa Bhakta, CEO of Butterfield Mortgages Limited, comments: “With Monetary Policy Committee decisions being the most significant driver of market sentiment, today’s rate cut should precede more activity as borrowing cost becomes lower. That said, challenges remain, and as lenders we must continue to provide flexible solutions and bespoke support to ensure brokers and property investors are well-positioned to thrive as the economic outlook improves.”

And Paresh Raja, CEO of Market Financial Solutions, adds: “Today’s decision was widely expected, and there’s been plenty of evidence of lenders changing their rates over recent weeks ahead of the base rate being cut. But it is another positive step nonetheless, and it will likely bring more buyers into the market. As ever, no sooner has the Bank of England delivered one decision than speculation begins about when it might cut the base rate again. The forecasts still suggest there could be anything between one and three further drops this year, but such predictions are sensitive to other trends, such as the performance of the economy and the rate of inflation. For now, the focus from lenders and brokers has to be on taking a pragmatic, responsive approach, ensuring they support borrowers as best they can, particularly if a wave of new prospective buyers and investors does enter the market.”