The Bank of England has just announced its first interest rate cut in four years, lowering the Base Rate to 5%. This move comes after a period of 14 consecutive increases aimed at tackling high inflation. Now that inflation has dropped back to the target of 2%, the Bank is shifting focus to support the wider economy.
So, what does this mean for mortgages? We’ve seen mortgage rates stabilize and even decrease slightly over the past few months. For instance, the average 5-year fixed rate has dropped to 4.87%, down from 6.08% in July. While we might not see drastically lower rates right away, this trend is likely to continue if further cuts happen.
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, you could see your monthly payments decrease with this Base Rate cut.
With the potential for more rate cuts on the horizon, it’s a great time to review your mortgage options. Whether you’re looking to remortgage or buy a new home, get in touch to explore how these changes could benefit you.
The next update on interest rates is scheduled for September 19, so stay tuned for more news.
