Martin Lewis has given a key update for savers and anyone with a mortgage, credit card or loan following the Bank of England rate announcement today.
This followed the announcement the Bank has cut interest rates to their lowest level for two years, from 4.5% to 4.25%, following a slowdown in inflation in recent months.
Five members of the Bank’s nine-strong Monetary Policy Committee voted for the 0.25 percentage point cut. Two members voted to hold rates at 4.5%, while a further two called for a sharp cut to 4%. The Bank also predicted the UK economy will grow by 1% this year, upgrading its previous 0.75% forecast on the back of a strong start to 2025.
News: The UK Bank of England base rate has again been cut, now from 4.5% to 4.25%
— Martin Lewis (@MartinSLewis) May 8, 2025
Five of nine voted for this cut, two to keep it on hold, two for a bigger 0.5% cut. More cuts are expected across 2025, some analysts say down to 3% ish by the year end, though bank saying it'll…
The Money Saving Expert founder tweeted: "What it means for mortgages, savings, cards & loans...
"If fixed, no change until your fix ends. The rate of new fixes may drop a tad, but this cut was expected so has mostly already been factored in.
"If on tracker rate will drop 0.25% points, if variable it should drop by around that but it doesn't have to be exact amount.
"Usually (it) takes up to a month to come in. The reduction is equivalent to £15 lower repayments per month per £100,000 of mortgage."
For savings, he added: "Variable rate savings (which is mainly easy access accounts) will likely drop within a two to four weeks by 0.25%. And I hear we'll therefore probably see the last of the over 5% cash ISA rates (see best buys on MoneySavingExpert).
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"Fix rate savings have already factored in some of this cut. Though they may shave down further. If you want to fix your savings, safest bet is do it today."
He said that credit card rates are mostly unaffected, they're already so high above the base rate with typical APRs now 24.9% . Though it may see slightly longer 0% deals launched.
"Existing loans are unaffected as they're usually fixed rates," he concluded.
"New loans are set based more on interest rate forecasts than base rate moves. Expect the cheapest new loan rates to shave down very marginally."
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