The cut will translate into lower borrowing costs for homeowners with a base rate tracker mortgage – their rate will fall in line with the Bank’s cut.
The returns on savings are generally not explicitly tied to the Bank of England base rate, but Thursday’s reduction is likely to be passed on to many savers who have easy-access accounts and others who do not have accounts with fixed interest rates.
Interest rates on new fixed-rate accounts have already been falling – like fixed-rate mortgages they reflect expectations of where the base rate will be in future.
What does the Bank of England interest rate cut mean for mortgages and savings?
Today’s decision was expected, but the fact that two economists voted for a steeper, half a percentage point cut may make the markets believe rates will come down further than they had anticipated.
