The Bank of England has today decided to drop the base rate of interest to 4.75 percent, after holding it at 5 percent at their last meeting.
This would mark the second time this year the central bank has convened and concluded that a rate drop was the best decision. The last rate drop was a 0.25 point drop from 5.25 percent back in their August meeting.
The rate cut will be welcomed by borrowers as those on tracker mortgages should see a reduction in their payments. This will affect near 600,000 mortgages. Standard variable rates and discounted SVR mortages will have to see if the bank/building society decides to pass on the cut.
People on fixed mortgages will see no change, but those nearing the end of their deal and have not yet accepted a mortgage offer may be able to find a better mortgage deal. You can use our mortgage calculator to see how the lowered rate could your payments. The average two year and five year mortgage fixed deals are at 5.4 and 5.1 percent, respectively.
Savers will see their savings rate drop for the second time this year, which will be disappointing, but the decision to lower the rate is cemented in the UK's inflation rate now having fallen to below the 2 percent target. At 1.7 percent this is better than it has average over recent years.
According to BoE governer, Andrew Bailey, rate drops will become common over the next year as the Bank responds to levelling out inflation and gradually trends interest rates downwards. The OBR expects CPI inflation to float above 2 percent for the next 5 years due to increase governmental spending and the employers NIC increases that were announced in last week's Autumn Budget.
House prices have not been falling despite the higher rates we've being seeing in recent year - with an average home now priced near £300,000.
