Interest Rates Reduced again to 0.1% to help economy
The Bank of England has slashed the base rate for the second time in just over a week in a further emergency response to the coronavirus pandemic, reducing it from 0.25% to 0.1%.
The base rate is the Bank of England's official borrowing rate – ie, what it charges other banks and lenders when they borrow money – and it influences what borrowers pay and savers earn.The surprise decision was taken at a special meeting of the Bank's Monetary Policy Committee on Thursday 19 March, just days after it was cut from 0.75% to 0.25%. The latest cut takes the base rate to its lowest-ever level.Here are the key need-to-knows for your finances:
Some mortgages will get even cheaper. Homes with tracker mortgages – whose rates 'track' the base rate – should see their rates drop even further. However, fixes won't change. With variable rate mortgages you should definitely see a cut, usually by the full 0.65% over the two base rate cuts, but it varies.
It's yet more bad news for savers. Savings rates have been woeful for years and were already set to drop after last week's base rate cut. Now they're likely to fall further, although if you've a fixed-rate account you're protected for the time being.
Fixes are fixed – check if you'll save ditching yours. As the name suggests, rates WON'T change during the fixed period – though any new fix you remortgage to in future may end up being cheaper now the base rate has dropped.
I have a mortgage. What happens now?Some will see mortgages get (even) cheaper after the most recent base rate cut – but it depends on the type of mortgage you have: Read More