Bank of England cuts rates by 0.25%

It's now or never for the Bank of England. Consumers and businesses are reeling from the October Budget and a 25 basis points cut is exaclty what the UK needs to be reassured that our policy makers and monetary leaders are on our side.

Finally, some action on Threadneedle Street that will hopefully provide consumer confidence and get the property market moving through the spring. Beleaguered borrowers have been waiting months for some good news, although this cut has been widely anticipated and already priced in by most lenders. It should at least encourage more competition between lenders and hopefully leave the frosty bite of winter and large fuel bills behind us. Sadly it likely won't help many of those moving or purchasing and about to be hit with larger stamp duty from April.

This base rate cut will probably mean we get sub-4% fixed rates again soon, which is good news for borrowers searching for cheaper mortgages. Lenders should also be able to issue more generous loan sizes, as they can lower the stress test figures used to determine how much people can borrow on their affordability calculators.
The base rate needed to come down because the higher rates are squeezing too many people, ultimately reducing their spending power and our economic growth. There needs to be a balance so savers can get a decent return on their money and mortgage rates are more reasonably priced especially for those with smaller deposits. There is a need for cheaper mortgage rates with so many first-time buyers keen to get on the property ladder, and a reported 1.8 million homeowners needing to remortgage this year.

With growth stalling and inflation lingering, reckoning day arrives, as this rate cut signals that policymakers are under pressure to ease financial conditions despite global market volatility and a weakened pound. While, admittedly, headline inflation has cooled significantly from the double-digit peaks of 2023, growth has stalled entirely, with the UK economy expected to barely register an expansion in Q4 2024. Consequently, today’s decision highlights that the BoE are acutely aware of the uncomfortable reality that maintaining the current rate trajectory could deepen the UK’s economic malaise, choking off investment and dampening consumer demand. The markets had spoken with a clear belief that the era of relentless tightening was nearing an end, with a rate cut clearly supporting this view. However, whether optimism is warranted will depend on the Bank’s ability to navigate an increasingly treacherous path as global markets continue to influence the domestic economic outlook.

The Bank of England’s recent rate cut to 4.5% is spreading the love just ahead of Valentine’s Day. If you're on a Tracker or SVR mortgage, expect smaller monthly payments, while fixed-rate deals may follow suit, making it a great time to remortgage. It’s like the Bank of England is giving your wallet a break—finally, some good news for mortgage borrowers and the property market in general.

The 0.25% cut in base rate is a decent step forward, but may be too little to make any significant difference for homeowners. The 630,000 variable and tracker mortgage borrowers will see an immediate saving, whilst those looking for a new fixed rate might have to wait a bit longer to see this cut priced into the Swap rates. What’s more important today is the Monetary Policy Report analysis and projections, key to the future pricing of mortgage products. Favourable news on further base rate cuts will see mortgage rates tumble.

The Bank of England has delivered a much-needed lifeline to the struggling UK economy by cutting rates, and the MPC deserves credit for recognising the urgency. For the 1.5 million-plus borrowers coming off fixed-rate mortgages this year, this decision may soften the blow of the impending payment shock. However, mortgage rates remain significantly higher than many are used to, and affordability concerns will persist. While this rate cut will help ease some pressure, the deeper issue is the government’s failure to get the economy moving. Businesses are grappling with plummeting confidence, job losses are mounting, and many firms are fighting just to survive. Without a growth-oriented fiscal plan, this rate cut risks being a short-term patch on a long-term problem. The government must complement this decision with serious investment in job creation, support for businesses, and productivity-focused policies. Without it, households and firms will continue to feel the squeeze.

A 0.25% reduction is exactly what was expected and more importantly much needed. The lowest now for 18mths so hopefully we will start to see some positive financial and economic shoots at last.

The voting split of 7/2 shows a real desire to help borrowers. Especially as the 2 wanted to cut bigger, which hints at further cuts to come this year. Time to strap in and watch swap rates and get ready for the better lender rates which are undoubtedly on the way.

A cautious cut, but still a sight for sore eyes. This 0.25% drop will give businesses some breathing room and help restore consumer confidence. It’s a sign that the worst may be behind us—but the real test is how quickly lenders pass this on to borrowers.

The Bank of England's decision to trim rates by 0.25% to 4.5% signals a welcome shift in monetary policy, though the split vote suggests there was appetite for more decisive action. With two MPC members advocating for a bolder 0.5% reduction, it raises the question of whether this measured approach will provide sufficient stimulus for an economy facing significant headwinds.

While this adjustment marks a positive step toward easing financial conditions, the broader economic context - including lingering effects from the October Budget and persistent cost pressures - suggests more substantial intervention may be necessary. The anticipated trajectory of further cuts through 2025 offers some encouragement, but with business confidence wavering and investment levels subdued, the effectiveness of this cautious approach in catalyzing meaningful economic recovery remains to be seen.

Whilst a cut has been widely expected today and is very positive news for mortgage holders, the biggest news coming from the decision today will be that two of the committee members voted to cut the base rate by 0.5%. The Bank of England suggest that they want to take a cautious approach to their policy, however these two members believe that the base rate needs to be cut at a quicker rate to help the economy. It will be interesting to see how the markets react to the vote, hopefully we will see lower rates for mortgage holders in the coming weeks.

The Bank of England have just reduced base rate by 0.25% to 4.5%. This won't necessarily feed into the deals on new fixed-rate mortgage rates as the reduction today was expected, and to a certain extent, priced-in. Do check with a mortgage broker though if you've had a deal locked in for a while, but you haven't yet completed - there could be lower rates available. But, those with mortgages on tracker rates will see a reduction in their monthly payments. A warning for savers... watch out for those reductions feeding through into what interest you earn.

The Bank of England cut rates by 0.25% to 4.5% at lunchtime today with 7 of the 9 MPC members voting in favour of the move. Two members voting for a 0.5% cut shows the level of concern about the state of the UK economy. Borrowers should benefit from lower mortgage and business loan costs, while savers face weaker returns. The pound may weaken across the board, helping exports but increasing import costs and possibly fuelling inflation further. The FTSE100 was already at an all-time record high before the announcement and could see the rally continue as equities become more attractive, while bond yields may fall. The property market may see higher demand due to cheaper mortgages, especially before April’s rise in stamp duty rates. I doubt it is enough to rescue the UK economy from its recession watch but businesses may invest more, even with rising inflation risks. The cut eases financial conditions but poses challenges for savers and inflation control.