The Bank of England has voted to reduce the Base Rate by 0.25%, bringing it down to 4.25%—its second cut of the year. The rate was previously held at 4.5% in March, following a 0.25% cut in February.
The Bank reviews interest rates every six weeks, aiming to keep inflation close to the government’s 2% target while supporting economic stability. Current inflation sits at 2.6%, still slightly above target.
This week’s cut was widely anticipated by financial markets, as holding rates higher for longer risked putting further strain on economic growth, potentially impacting both businesses and households.
In the mortgage market, rates have continued to ease gradually. The average 2-year fixed-rate mortgage now stands at 4.64%, down 0.05% from last week. The average 5-year fixed rate has also dipped, now sitting at 4.60%.
A change to the Base Rate can affect how much interest you pay on your mortgage or loans. If you’re on a fixed-rate mortgage, your payments won’t change until your deal ends. However, if you’re on a tracker or variable-rate mortgage that follows the Base Rate, this latest reduction will likely lead to lower monthly repayments.
If your fixed-rate deal is ending soon and you’re thinking about your next steps, now is a great time to review your options. Contact your local Karl Tatler office to book a free appointment with one of our eight experienced mortgage advisers.
