Bank of England slashes interest rates to combat coronavirus 'shock' – what it means for you

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 rate-cut decision was taken at a special meeting of the Bank's Monetary Policy Committee on Tuesday. The Bank said the cut was a response to the "economic shock" of coronavirus and would "help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance". 

The base rate was last cut in 2016, when it fell from 0.5% to 0.25%. It's risen twice since to reach 0.75%. But interest rates have generally been at historic lows since the 2008 financial crash. 

Here are the need-to-knows for your finances: 

• Some mortgages will get cheaper. Homes with tracker mortgages – whose rates 'track' the base rate – should see their rates drop. However, fixes won't change and with others it's not clear-cut. See our mortgages analysis.

• It's more bad news for savers. Savings rates have been woeful for years and are now likely to fall further, although if you've a fixed-rate account you're protected for the time being. See our savings analysis.

We'll be updating this story throughout today with more analysis and what banks and lenders are doing in response to the rate cut. And for full and constantly updated info on travel insurance, holiday bookings and more during the coronavirus outbreak, see our Covid-19 Coronavirus Help guide.

I have a mortgage. What happens now?

Some will see mortgages get cheaper after the base rate cut – but it depends on the type of mortgage you have:

• 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. 

  But that doesn't mean doing nothing until your fix runs out. Use our Ditch your fix? 

  tool to check if you can save by switching. 

• Lenders MAY cut standard variable rate (SVR) or 'discount' mortgages.

   These move at lenders' whim, so it depends what individual lenders decide to do – we're checking with the big ones now.

  You'll usually be on an SVR after your fix or tracker ends. A 'discount' mortgage follows the SVR at a set rate, eg, if the SVR is 4% and the rate is SVR minus one percentage point, it's 3%.

  SVRs are pricey, so if you're on one, don't automatically stick with it even if your rate is cut. 

• On a tracker mortgage? Check when it will fall.

   As the name suggests, these 'track' the base rate, so mortgage costs should drop by an average £35-40/mth on a typical £150k mortgage. 

  A tiny number won't see rates drop where their deal has what's called a 'collar', which prevents rates falling below a certain level. You should be contacted by your lender if you're impacted.

We're speaking to all the major providers now to ask them what they're doing in response to the base rate cut. These will be updated in the table below.

Whatever the impact, if coming to the end of your fix or tracker, pounce on a new deal – you can usually do this up to six months ahead. If looking for a new deal, whatever the reason, see our Remortgage Guide or First-Time Buyers' Guide for help, plus our Mortgage Best-Buys Comparison for the top deals. 

I'm looking for a mortgage – what should I do?

Our message for months has been that mortgage rates are already incredibly low, so if you're looking for a deal and you qualify for one, why wait? The base rate going down doesn't change that message.While there is a chance that we could see slightly lower best-buy mortgage rates in the wake of the cut, rates are already very low. See our First-Time Buyers' Guide or Remortgage Guide for full help and our Mortgage Best-Buys Comparison Tool to find top deals.

What will happen to savings rates?

The base rate cut is yet more bad news for savers – rates have been rubbish for years, and now the interest you earn is likely to fall further, though if you have a fixed-rate account you are protected from rate drops for the time being.

Banks must give existing customers at least two months' notice of a cut (for current accounts and instant access savings accounts), though of course rates for new customers could drop instantly.

We're speaking to all the major savings providers in the wake of the base rate cut to ask them what they're doing, and will update this story when we know more.

For now Barclays, Halifax, Lloyds, Metro Bank, Nationwide, OneSavings Bank, TSB and Yorkshire Building Society have told us that they are currently reviewing their rates.

For a full round-up of the current top picks, see Top Savings Accounts.