What do the interest rate cuts mean for you?
The Bank of England has cut the base rate for the first time in more than seven years, reducing it from 0.5% to a new historic low of 0.25%. Here's what it means for mortgages, savings, exchange rates and more.
The rate cut was announced as part of a package of measures which the Bank of England says is "designed to provide additional support to growth". As well as the cut to the base rate, that package includes the purchase of up to £10 billion of corporate bonds and up to £60 billion of UK Government bonds – a move designed to inject more money into the financial system.
Some mortgages will get cheaper. Around 1.5 million homes are on tracker mortgages, and these should drop,
It's more bad news for savers. Savings rates have been woeful for years and are now likely to fall further, although if you have a fixed rate account you're protected for the time being.
The pound has fallen further. In the wake of the announcement we saw a further drop in sterling.
In terms of mortgages, some will see theirs get cheaper after the base rate cut. Whatever the impact, if coming to the end of your fix or tracker, pounce on a new deal as your rate will likely rocket soon.
Fixes are fixed - check if you'll save ditching yours. They account for half of mortgages, and as the name suggests, rates WON'T change during the fixed period. That doesn't mean doing nothing.
Will your lender cut your standard variable rate (SVR) or 'discount' mortgage? These move at lenders' whim.
Check when your tracker will fall. As the name suggests, these 'track' the base rate, so for the 1.5 million on them, mortgage costs should drop by an average £20/month on a typical £150k mortgage.
For a comprehensive guide on how major service providers are implementing the change, read the original article here.
* Original article courtesy of Callum Brodie at www.moneysavingexpert.com