Bank of England base rate falls to 4.75%: what does it mean for you?

Here’s how the fall in the Bank of England (BoE) base rate to 4.75%* could impact your mortgage, whether you’re a homeowner or property investor.

Let’s take a look at the current mortgage market to help you understand what’s going on and what you can do.

What is the Bank of England (BoE) base rate?

Set by the BoE, the base rate is a benchmark for the cost of borrowing money. Mortgage lenders base the rates they charge on it. When the BoE increases the base rate, it inevitably also increases the cost of borrowing. On the flip side, if the BoE decreases the rate (as it has done this time), it could decrease the cost of borrowing, potentially paving the way to more attractive, affordable mortgage deals.

The Bank of England’s Monetary Policy Committee sets interest rates, known as the Bank of England base rate. The Bank of England base rate is now 4.75% (correct as of November 2024)*

How does the change directly affect me and my mortgage?

A decrease in the BoE base rate will have a different impact depending on what type of mortgage you are currently on or looking to get.

Let’s have a more detailed look at the effects of the base rate decision on the three main mortgage types:

Fixed Rate - if you are on a fixed rate deal, your current payments will be unaffected by the base rate changes as your monthly payments are fixed. If your fixed rate is coming to an end, you may find it beneficial to look around for a better mortgage deal you could switch to.

Please note that you may have to pay an early repayment charge if you change to a new product before the end of your current deal.

Lender’s Standard Variable Rate (SVR) - you may benefit from lower monthly payments if your existing lender decides to pass on any savings by lowering their current SVR. Alternatively, it may be a good opportunity to look at potentially lower fixed rate or tracker mortgage deals, which you are usually free to switch to without incurring early repayment charges associated with a fixed rate mortgage.

Tracker Rate - you will benefit from lower monthly payments as a tracker rate will track the drop in the base rate. However, you will not be protected from any future increases.

New mortgage - a lower base rate could mean access to more competitive rates from lenders who are looking to attract new customers. A Countrywide Mortgage Consultant can compare thousands of deals from a panel of high street and specialist lenders, to find the best deal for you.

I am a landlord – what does this mean for me?

If you’re a landlord with a tracker or variable rate mortgage, the base rate decreasing could have a positive impact on your monthly mortgage repayments for your property portfolio. If you are on a fixed rate, then it may be worth exploring if there is a better option for you (taking in to account any early repayment charges).

Will interest rates decreasing mean lower house prices?

It’s difficult to tell. The increase or decrease in house prices very much depends upon the supply and demand of property. To understand how the base rate may have affected your property’s value, it’s best to get an up-to-date valuation.

What’s your next step?

As mentioned before, you do need to consider that if you are on a fixed rate or tracker mortgage and decide to try to switch to a different rate early, you may have an early repayment charge to pay. Having an initial chat with a mortgage professional may be worthwhile if you are on a Standard Variable Rate, your circumstances have changed (such as a new job) or you are nearing the end of your current fixed deal. Our qualified Mortgage Services consultants are here to help explain your options in more detail based on your circumstances and have access to a range of mortgage products from a panel of lenders.

Any fees payable will be explained in your initial no-obligation appointment, before you choose whether to use our Mortgage Services.

Countrywide Mortgage Services is a trading name of Countrywide Principal Services Ltd which is authorised and regulated by the Financial Conduct Authority (Firm Registration Number 301684). Registered Office: Countrywide House, 6 Caldecotte Lake Business Park, Caldecotte Lake Drive, Milton Keynes, MK7 8JT. Registered in England no. 01707341. MS/CW/7702/09.24