Bank of England Cuts Interest Rates to 4.5%

Today, the Bank of England reduced its base interest rate by 0.25 percentage points to 4.5%. This marks the third rate cut in six months, aimed at supporting the UK's slowing economy.

The impact of lower rates on home buyers

Lower interest rates can make mortgages more affordable, reducing monthly payments and making home ownership more accessible to more first-time buyers.

However, increased demand can push property prices higher over time. Buyers should budget carefully and consider future rate changes when planning their purchase.

Impact on homeowners

Variable or tracker mortgage holders may see an immediate drop in monthly payments, offering short-term savings. However, it’s worth checking whether switching to a fixed rate could provide longer-term stability.

Fixed-rate mortgage holders won’t see an immediate impact, but those with deals ending soon should start monitoring rates in preparation for remortgaging.

While the rate cut provides financial relief, the Bank of England has indicated that the Bank will take a "gradual and careful approach to reducing rates further", and rates are unlikely to fall in the near future.

Will rates continue to fall?

Further rate cuts are uncertain. Inflation remains a key concern, and policymakers will be cautious about lowering rates too aggressively. Future decisions will depend on inflation trends, wage growth, and overall economic performance.

If inflation remains under control and the economy slows, additional cuts could follow. However, if price pressures persist, the Bank may pause or even raise rates again. Borrowers waiting for significantly lower rates may need to be patient, knowing there’s a risk that rates could rise instead.