For the second time in 2024, the Bank of England has reduced the base rate, lowering it from 5.00% to 4.75%. While not a unanimous decision, the reduction reflects the central bank’s ongoing efforts to ease financial pressures.

However, Bank of England Governor Andrew Bailey has indicated that while additional cuts may be on the horizon, a further rate reduction in December is now less likely following recent budget announcements. Instead, gradual rate reductions are expected to extend into 2025.

What Does This Mean for Your Mortgage Payments…..

Will My Mortgage Rate Decrease?

For mortgage holders on base rate or variable rate products, there’s a good chance you’ll see a reduction in monthly payments.

Base rate tracker mortgage holders will receive the full 0.25% reduction. However, for those on discounted variable rates, individual banks and building societies will determine soon whether to pass the full reduction on to customers.

As an example, on a £200,000 mortgage over 25 years, a 0.25% rate cut could reduce payments by approximately £30 per month.

Those tied into a Fixed-rate mortgage, however, will not see an immediate change in their payments. If you’re approaching the end of your fixed-rate term within the next six months, it’s wise to start reviewing options now, as letting your rate revert to the lender’s standard variable rate (SVR) may be more costly.

Can I Secure a Better Deal?

If your current fixed-rate deal is ending within the next six months, you might be wondering if this rate cut means lower rates on your next mortgage. While mortgage rates tend to follow the UK base rate, other market factors also influence the cost of new mortgage products.

One such factor is swap rates, which represent the cost at which financial institutions exchange fixed and floating interest payments. These swap rates are critical in setting fixed-rate mortgages and have been somewhat volatile recently, especially following the UK Budget. Many lenders raised mortgage rates after the budget announcement, but today’s rates are still more favourable compared to November 2023.

If you have less than six months remaining on your mortgage deal, the advice is generally to secure a new deal in readiness for the end of your mortgage deal.

Andrew Sheen, Managing Director of Thameside Mortgages in Kent, underscores the importance of planning ahead. “By exploring mortgage options six months before a deal ends, borrowers have the flexibility to adjust their plans if rates change, allowing them to secure the best possible deal.”

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Get in Touch

Contact Thameside Mortgages today to learn more about how they can help you secure a great deal.

You can call us on 03455 120 125, or complete the form below.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it. The Financial Conduct Authority does not regulate most forms of buy to let mortgage.