Base rate cut to 3.75%: What it ACTUALLY means for your mortgage

The Bank of England has just cut the base rate to 3.75%, its lowest level in almost three years.

That sounds like big news (and it is) but before anyone gets carried away, here’s what it actually means for mortgages.

Buying or remortgaging? Don’t expect instant bargains

If you’re buying a home or looking to remortgage, this base rate cut won’t instantly make mortgage deals cheaper.

Most lenders had been expecting this move for a few weeks, which is why we’ve already seen fixed mortgage rates edging down recently. In other words, a lot of this cut was priced in ahead of time.

Looking ahead, the Bank of England has been clear that any further rate cuts are likely to be gradual, not dramatic. The decision today was a narrow 5-4 vote, which tells us the Bank is still being very cautious. That’s encouraging for the long term - but it means steady progress, not a sudden return to ultra-cheap mortgages.

The Bank of England has just cut the base rate to 3.75%, its lowest level in almost three years.

Already have a mortgage? Here’s who benefits

If you already have a mortgage, what happens next depends on the type you’re on.

• Tracker rate borrowers: This is where the change is felt quickest. Your interest rate should reduce in line with the base rate cut. Your lender will usually contact you shortly to confirm your new, slightly lower monthly payment.

• Fixed rate borrowers: Less exciting, unfortunately. If you’re on a fixed rate, nothing changes today. Your rate - and your monthly payment - stays exactly the same until your fixed deal ends.

So… is this good news?

Yes - overall, this is positive news.

But it’s not a game-changer for most people, and it doesn’t suddenly rewrite the mortgage market overnight. What it does signal is that the pressure is easing and the direction of travel is improving.

And on that note - you can safely get back to your last-minute Christmas shopping!

If you're looking for a mortgage adviser in Wirral to help you navigate these new rates, click here to book a consultation.

Important Information:

• YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

• The impact on your monthly payments will depend on your individual mortgage contract.

• This article is for information purposes only and does not constitute financial or mortgage advice.