Interest rates fall even further - what does that mean for you?
The Bank's governor Andrew Bailey announced this afternoon its Monetary Policy Committee has decided on a reduction of a further 0.25 percent, bringing the figure to 4 percent.
It marks another fall for the base rate after it peaked at 5.25 percent in autumn 2023 and stayed there until the following summer.
In the dramatic few years that followed the Covid lockdowns, the Bank increased interest rates 14 times in an effort to control inflation, causing alarm for homeowners.
Today's decision means repayments on many mortgages will fall – but it could also result in less welcome news for savers.
If you've got a tracker mortgage, meaning one that's tied to the base rate decided by the Bank of England, your repayments will go down each month.
You may see a reduction if you have a standard variable rate (SVR) mortgage, too. Even though these deals are decided by your lender, they often also move according to the base rate.
However, you'll have no such luck if you opted for a fixed-rate mortgage, since you've agreed to pay the same amount for a certain amount of time.
If you're looking to remortgage, there's a strong chance the new fixed rate will be higher than the one you were on originally, since the base rate is still close to its highest level for the past 15 years.
Savers have had a decent time in the past few months, when inflation was low but interest rates remained high.
That's because banks tend to look at the base rate when deciding their own savings rates, and lower inflation meant people could stash more money away with a higher return.
But it's likely that those rates will as a result of today's reduction.
So, now may be a good time to go hunting for some decent deals if you're looking for somewhere to place your savings.
For much of summer 2024, the Bank of England interest rate was at 5.25 percent – its highest point since the beginning of the financial crisis in 2007.
That only started to change last August, when a 0.25 percent reduction – the first cut in more than four years – was agreed.
The rate fell another 0.25 percent in November, as the Bank became increasingly confident that inflation was under control, then again in February.
At the next Monetary Policy Committee meeting in March, it was kept at 4.5 percent before a further 0.25 percent decrease was agreed in May. More Trending
The rate was held steady again at the last meeting in June.
Bailey said the Bank would be taking a 'gradual and careful approach to reducing rates further' for the rest of 2025.
After today, the next meeting of the Bank's Monetary Policy Committee when the interest rate will be reviewed is September 18.
However, no change is guaranteed as the members may decide the keep the rate at the same level.
Get in touch with our news team by emailing us at webnews@metro.co.uk.
For more stories like this, check our news page.
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