Martin Lewis has quickly moved to explain what the Bank of England’s decision to cut interest rates means for people with savings, mortgages, loans and more. The Bank voted to cut interest rates from 4.75% to 4.5% on Thursday, slashing short-term growth forecasts for the economy.
Governor Andrew Bailey said the cut will be “welcome news to many” but that the Bank is “monitoring the UK economy and global developments very closely, and taking a gradual and careful approach to reducing rates further”. The Bank halved its growth forecast for the UK economy to 0.75% for this year, down from previous estimates of 1.5%, before accelerating again in 2026 and 2027.
What it means for mortgages, Martin Lewis explained on X, is that “if fixed, no change until your fix ends. If on tracker rate will drop 0.25% points, if variable it should drop by around that by doesn’t have to be exact amount. Usually takes up to a month to come in.”
He continued: “The reduction is equivalent to £15 lower repayments per month per £100,000 of mortgage.” He also explained that “variable rate savings (which is mainly easy access accounts) will likely drop within a two to four weeks by 0.25%”.
However, he said there is “a lot of competition out there in the cash ISA market at the moment so I think the very top rates could stay at or above 5%”, and urged people to check out the “best buys” on the Money Saving Expert website.
Mr Lewis added: “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.”
Mr Lewis concluded the post by adding that existing loans will be unaffected as “they’re usually fixed rates”, and said that people can “expect the cheapest new loan rates to shave down very marginally.”