The Bank of England has just announced that it’s cutting the base rate in half, chopping it from 0.5% to 0.25%.
It’s the first time the base rate has changed since way back in 2009, and it’s big news for both savers and mortgage holders.
With mortgages, the impact depends what kind of deal you have.
If your mortgage rate is variable, you can sit tight and wait to see how your lender reacts – hopefully they will cut the rate soon, making it cheaper.
Or you could consider getting a new fixed rate deal. In the next few weeks, it’s likely some banks will launch cheap deals, letting you switch and lock in a low rate that protects you against any increases for the duration of the fix.
If you’ve already got a fixed rate mortgage, you’re probably best to stay put, because moving may mean paying a hefty penalty.
But once your deal comes to an end, you can shop around for a competitive deal.
If you’ve got a tracker mortgage, allow yourself a mini fist-pump – you payments could fall automatically as soon as next month.
If you have any questions, you can call fee-free mortgage broker London & Country for some advice on this number:
Savings rates have been painfully low for years, and the base rate move could see them tick even lower.
You can try two things.
First, make sure your long term savings are working as hard as possible. Rates are low in general, but some are much worse than others. Our savings pages show the best available rates including ISAs, fixed rate bonds and peer-to-peer lending.
Secondly, see what you could make by switching current account. While traditionally they paid a tiny sliver of interest, a new breed pay as much as 5%, albeit only on small-ish balances.
You have to pay your salary in and run direct debits, but if you need a current account, why not have one that pays you for having it?
Again, you can check out what’s on offer on our current accounts page.
To get a quick idea of how the base rate change may affect you we have built a base rate calculator. pop in the size of your savings and the size of your mortgage and it will give you a quick idea of how you will fare.