The Bank of England have announced a further 25 point base rate reduction from 5% down to 4.75%. This reduction follows a reduction of the same amount in August 2024 and a subsequent holding of base rate in September of the same year.
What does a base rate reduction mean for mortgages?
A reduction in base rate is beneficial for those with mortgages linked to the base rate, either directly, such as tracker mortgages, or indirectly, such variable rate mortgages.
Those with tracker mortgages will see their monthly payments drop in line with the base rate reduction by 0.25%. Standard Variable Rate mortgages are expected to also decrease. However, due to the fact these mortgages are subject to lender discretion and margins, the amount of reduction may vary from lender to lender.
However, fixed-rate mortgage rates are not expected to see any downward movement due to the proactive rate setting of the larger lenders. These lenders have largely already been factoring in this latest base rate reduction over recent months, which stifles any dramatic movement in light of the announcement.
Following the budget, the fixed-rate mortgage market actually saw a rise in mortgage rates, in spite of the anticipation of this announcement.
Speaking on the Bank of England’s decision, Thomas Jackson, Director of Cooper Associates Mortgages, commented:
“This decision from the Bank of England is a strong indicator of where we are today and our direction of travel, with indicators such as inflation and employment leading to their decision today. It was widely predicted to reduce today and likely means that we will continue to see further reductions to base rate over the next year. This could however be the last for 2024. Following the US Presential Election many are already predicting fewer reductions in 2025 than what was previously being predicted.”
With fixed rates rising across the market, you may wish to consider locking in your mortgage rate now. At Cooper Associates Mortgages, should a better rate become available to you once you’ve locked in your fixed rate we will swap you to the better product.
Cooper Associates Mortgages’ team of expert advisers are available to assist you with all of your mortgage needs. Get in touch today to find out how we can help you into your new home.
