Martin Lewis has shed light on how the Bank of England’s interest rate cut today (November 7) will affect mortgage holders. The finance guru revealed that tracker rates could become cheaper by approximately £25 a month per £100,000 – meaning those with a £200,000 mortgage could potentially save £300 annually.
The Bank of England slashed interest rates to 4.75% during its November Monetary Policy Committee (MPC) meeting, marking the second reduction in UK borrowing costs within four months. Andrew Bailey, the Bank of England governor, stated: “We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much.”
“But if the economy evolves as we expect it’s likely that interest rates will continue to fall gradually from here.” Speaking immediately after on X, Mr Lewis explained: “UK Bank of England Base rate DOWN 0.25% points to 4.75%. What it means for mortgages and savings. Mortgages: Tracker rates will get cheaper by roughly £25 per month per £100,000 (variable and discount rates should drop too but dont have to go by same amount).
“Your fixed rate mortgage will not change. Though the rate you can fix at may get cheaper (although as they’re based on predictions of future interest rate some of this cut is already baked in). Savings: Easy access rates are usually variable, so both cash ISAs and normal savings, will likely drop by around 0.25% points, though as its competitive at the top, some of the best may leave it a little later to drop.”
The fixed rate on your savings will remain unchanged. However, the interest rate you can secure may decrease, although some of this reduction has already been factored in based on predictions of future interest rates, reports Cambridgeshire Live.
The Bank of England has revised its inflation forecast, expecting it to remain higher for a longer period than initially anticipated due to the spending and tax increases announced in the autumn Budget. The headline consumer price index inflation is now projected to return to the Bank’s 2% target in the second quarter of 2027, approximately a year later than previously forecast.
(Image: ITV)
Inflation is expected to peak at around 2.8% in the third quarter of next year, before declining in 2026 and early 2027, partly driven by energy prices and Budget measures. The policies outlined in the Budget are predicted to contribute nearly 0.5 percentage points to inflation in 2026.
Chancellor Rachel Reeves stated that the interest rate cut would be “welcome news” for millions of families, but acknowledged that households continue to face challenges following Liz Truss’ mini-budget. “Today’s interest rate cut will be welcome news for millions of families, but I am under no illusion about the scale of the challenge facing households after the previous Government’s mini-budget,” the Chancellor said.
The Chancellor said: “This Government’s first Budget has set out how we are taking the long-term decisions to fix the foundations to deliver change by investing in the NHS and rebuilding Britain, while ensuring working people don’t face higher taxes in their payslips.”
Meanwhile, a recent study has identified the most effective exercise for lowering blood pressure. The Bank of England has warned that the autumn Budget’s increases to employer taxes and the minimum wage could fuel inflation if businesses pass on the costs to consumers.
In a report released on Thursday, policymakers noted: “On the one hand, higher labour costs could constrain firms’ cash-flows if there was limited pass-through to pricing.”
“This in turn could moderate wage growth and further loosen the labour market through reduced labour demand. On the other hand, the increase in labour costs could prove more inflationary if upward pressure on prices were passed on to consumers.”
Following the Bank’s latest rate cut and revised inflation forecast, partly due to Budget measures, the pound strengthened. Sterling rose 0.4% to 1.293 US dollars and increased 0.2% to 1.202 euros.