Bank of England Slashes Interest Rates to 4.5%, Lowest Since June 2023

2025-03-01

The Bank of England has cut interest rates from 4.75% to 4.5%, marking the lowest level since June 2023. This decision, made by the Monetary Policy Committee (MPC) in a 7-2 vote, is expected to reduce borrowing costs for those on tracker mortgages, while fixed-rate mortgage holders will see no immediate change. Santander, one of the UK’s largest lenders, has already announced it will pass on the full cut to its variable-rate mortgage customers from 3 March.

For the majority of borrowers on fixed-rate deals, monthly repayments will remain unchanged. However, lenders have been reducing mortgage rates in anticipation of further cuts this year, with Yorkshire Building Society recently cutting rates by up to 0.31%. Experts suggest that new fixed-rate deals may become more competitive in the coming weeks, as lenders adjust to the rate cut.

The Bank also halved its growth forecast for the UK economy in 2025, from 1.5% to 0.75%, and warned that inflation could rise to 3.7% later this year due to higher energy and water costs. Despite the rate cut, Chancellor Rachel Reeves expressed dissatisfaction with the UK’s growth rate, emphasising the need for further economic measures.

Savers with easy-access accounts are likely to see lower returns, while fixed-rate savings accounts will remain unaffected. The Bank’s cautious approach to future rate cuts reflects ongoing economic uncertainty, with further reductions expected later in the year.

What does the Bank of England interest rate cut mean for mortgages and savings?

Decision will lead to lower borrowing costs for those on trackers – but fixed-rate deals will stay the same

www.theguardian.com

UK interest rates latest: Bank of England cuts interest rates to 4.5%, the lowest level since June 2023

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www.bbc.co.uk

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Interest rates have been cut by 0.25 percentage points today in good news for mortgage holders

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Reeves hit by gloomy growth forecast despite interest rate cut

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