Bank Of England Cuts Base Rate By 0.25%

In a widely anticipated move, the Bank of England (BofE) has reduced its base rate by 0.25%, from 4.75% to 4.5%*. The Central Bank’s Monetary Policy Committee (MPC), meeting for the first time since the start of the year, voted 7-2 in favour of the 0.25% cut, the third since August 2024. 

The base rate is considered the BofE’s most powerful tool in its battle to keep UK inflation at or below 2%. Last month's latest inflation figures recorded a slight rise in the central rate of price increases by 0.1% to 2.5%—a smaller increase than expected but still above the target range. 

While announcing its decision on the base rate, the BofE also reduced its growth forecast for the UK economy in 2025 from 1.5% to 0.75%*. It anticipates inflation will likely creep back up, predicting the main Consumer Price Index (CPI) could reach a peak of 3.7%* due to increasing energy prices before beginning to come back down again later in the year. 

All of this means UK households could be in for a bumpy ride as the economy potentially enters a period of stagflation (high inflation coupled with low economic growth). 

However, despite the gloomy news, the base rate is now at its lowest level since June 2023 and there is still cautious optimism further cuts will follow during 2025—two committee members at this latest meeting voted for a larger 0.5%* reduction—to bring inflation back under control and, hopefully, steer the UK economy away from recession. 

*Source: Bank of England

What does this mean for mortgages? 

If you currently have a variable-rate mortgage, such as a tracker mortgage, it’s good news! The 0.25% base rate cut also means you should see a reduction in your monthly repayments, depending on when your next payment is due (you should see a saving of around £15 per month for every £100,000 of mortgage debt). 

If you have a fixed-rate mortgage, your repayments will remain the same throughout the term of your deal, regardless of whether the base rate goes up or down. 

For anyone who’s a first-time buyer, looking to remortgage, or move house in 2025, there are plenty of competitive deals and special schemes available. The best way to find them is by using the services of an experienced mortgage broker—like us! 

Our mortgage team has access to over 100 lenders and can search the mortgage market on your behalf to find the right deal that suits your exact requirements. This will save you time and, potentially, some money. 

Just make an enquiry, and one of our Mortgage Experts will be in touch to help you get started.