The effects of today's decision by the Bank of England to drop interest rates to 5%, a cut of 0.25%, are unlikely to be straightforward, especially for borrowers. This is the lowest that the UK base rate has been since January 2007.
While often a rate cut causes banks' standard mortgage interest rate to follow suit, saving many borrowers money, this time the global credit crunch could interfere and keep Discount and Variable Rate mortgage payments high. However, it's good news for anyone on a tracker deal, as those rates will automatically fall by 0.25%, slicing around £20/month off payments per £100,000 outstanding.
It's not all bad news for savers either. Anyone who took out a fixed rate deal will continue to benefit from the extra interest. Standard savings accounts are likely to cut their rates though; all the details of when the top rates fall will be included in MoneySavingExpert.com's full Savings Guide www.moneysavingexpert.com/savings/savings-accounts-best-interest