The Bank of England has announced a much-anticipated cut to the base rate, bringing it down to 3.75%. This marks another step in easing borrowing costs after a period of elevated rates, and it could have a significant impact on both new and existing mortgage customers. The decision to lower the base rate reflects improving inflation trends and a desire to stimulate economic activity.
What does this mean for mortgage rates?
For homeowners and buyers, this means lenders may start adjusting their pricing to reflect cheaper borrowing costs. In the last week, mortgage rates have dropped to the lowest they have been in 3 years, and 1% lower than Jan 2024. While the base rate reduction doesn’t automatically change your mortgage rate, it influences the cost of funds for lenders. Fixed-rate products are often priced based on market expectations, so we’re already seeing competitive deals emerge.
How will today's announcement affect your current mortgage?
• If you’re on a fixed-rate mortgage, there's no change, but if you’re within the last 6 months of that deal, it’s worth looking at your options for remortgaging now. You can lock in a new rate in advance which will prevent you from reverting to your lender’s standard variable rate. Talk to us about your options.
• If you're on a tracker mortgage which effectively 'tracks' the base rate, and your lender reduces their base rate, you should see your interest rate come down and a change to your monthly repayment. This payment change isn’t always instant.
• If you're on a standard variable rate mortgage, the interest rate and your monthly repayment might come down. Lenders don’t always pass on these rate reductions to their customers immediately.
How will it affect your options for buying a home?
Take a look at the best deals we currently have available:
If you’re buying for the first time: First Time Buyer Mortgage Deals
If you’re buying a brand new home: New Build Mortgage Deals
If you’re moving home: Home Moving Mortgage Deals
If you’re investing: Buy-to-let Mortgage Deals
For anyone considering a new mortgage, now is an excellent time to explore options. It’s not just about the headline rate. Lenders are introducing changes that make homeownership more accessible:
• Fairer pricing across deposits: The difference between a 40% deposit product and a 10% deposit product is now just 0.4%, meaning if you’re a buyer without a big savings pot — or the “Bank of Mum & Dad”—you’re not being penalised as heavily as before.
• ALL-TIME HIGH income multiples: Many lenders now offer up to 5.5x income, giving some buyers greater purchasing power. This could mean you’re able to secure the right home now rather than settling for something you’ll need to trade up from in a few years.
• 0% deposit products: A growing number of lenders are offering no-deposit mortgages, opening the door for those with no savings to move from renting to owning—a huge step forward for first-time buyers.
Ready to talk to us about your mortgage?
Book an appointment today to talk to one of our advisers.
