What does the Base Rate decrease mean for you?
- Beth
- Jun 22, 2023
- 2 min read
Updated: Aug 8
How the Bank of England’s Base Rate Cut to 4% Impacts Your Mortgage:
If you’ve been keeping an eye on the financial news, you’ll have noticed the buzz around the Bank of England’s latest move. On August 7, 2025, they trimmed the base rate from 4.25% to 4%—the fifth cut since last August, decided by a narrow 5-4 vote.
The Big Picture: Why the Cut?
This decision comes as the UK economy tiptoes through a tricky landscape. Inflation’s ticked up to 3.6% (above the 2% target), but growth is sluggish, and the job market’s showing signs of softening. The Bank’s Monetary Policy Committee (MPC) opted for this cautious cut to stimulate activity without overheating things—though the split vote hints at some uncertainty.
How It Affects Your Mortgage
Now, let’s get to the good stuff—your mortgage! The impact depends on the type of deal you’re on:
Tracker Mortgages: If you’re on a tracker, you’re in for a treat. A £250,000 loan over 25 years could see monthly payments drop by around £40, reflecting the rate cut. It’s a direct link to the base rate, so you’ll feel this change pretty quickly—usually within a month or two as lenders adjust.
Standard Variable Rate (SVR) Mortgages: SVRs might dip, but it’s not guaranteed. Lenders aren’t obliged to pass on the cut, and some have already priced it in. We’ve noticed mixed reactions online, with some suggesting minimal movement, so it’s worth checking with us.
Fixed-Rate Mortgages: Sorry, no immediate change here. Your rate is locked in until the deal ends, but this cut could nudge future fixed rates downward as lenders recalibrate. If you’re remortgaging soon, you might catch a better deal.
What This Means for You
This rate drop is a breath of fresh air for borrowers. For those on trackers or nearing the end of a fixed term, it could ease monthly outgoings or free up cash for overpayments. . First-time buyers could find it a tad easier to enter the market, though deposit challenges remain. On the flip side, savers might groan as returns shrink, but as brokers, our focus is on helping you leverage this for your home.
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