The second rate cut of the year has come, with the Bank of England cutting the base rate to 4.25% down from 4.50%.
This is welcome news for those with mortgages, which can mean lower repayments almost immediately if you are on a variable rate mortgage (a mortgage where the rate can change), or for those on fixed rate mortgages, this can mean a better deal when the time comes to remortgage (switch rates).
For savers, it means those saving cash will typically see a lower interest rate (so earn less money), unless they are saving within a fixed rate saving account (where the rate won't change until the end of the agreed period).
Nuts About Money tip: it can be a good idea to invest your money rather than having a lot in cash savings. When done sensibly, you could earn a lot more over time. Here’s our best managed ISAs (where the experts handle things).
The base rate is generally reduced to encourage people to spend a bit more money, thereby boosting the economy. And it’s often increased if inflation is too high (the price of things like food increasing each year). Although inflation is currently still above the Bank of England target of 2% at 2.6%.
If you are saving cash, make sure you’re with one of the best saving accounts. It’s now more important than ever to make sure you’re getting every penny in interest you can.
And for those with mortgages, make sure you’re getting a good deal by checking our mortgage comparison tool. And, it’s a good idea to get a mortgage broker to search the market for you too.
