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Bank of England cuts interest rates AGAIN to record low of 0.1%

Bank of England cuts interest rates AGAIN to record low of 0.1%

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 percentage points over the two base rate cuts, but it varies. We're checking now with lenders what they're planning to do and will update this story. See Mortgages help.

  • 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. See Savings help.

We'll be updating this story throughout today with more analysis and info about what banks and lenders are doing in response to the rate cut. For full and constantly-updated info on the financial effects of coronavirus, see our Coronavirus Financial Help & Rights guide.

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:

  • 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 the whim of the lenders, so depend on 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 £10/month on a typical £150,000 mortgage – on top of the £35-£40/mth drop from the latest base rate cut.

    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 both base rate cuts. We'll update the table below when we have more details.

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 tool for the top deals.

What mortgage providers are doing for existing customers

PROVIDER CHANGE TO TRACKER MORTGAGES CHANGE TO SVR MORTGAGES
Atom Bank N/A Waiting to hear
Bank of Ireland Waiting to hear Waiting to hear
Barclays Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second
Birmingham Midshires Under review after first base rate cut, waiting to hear following second Under review after first base rate cut, waiting to hear following second
Bradford & Bingley Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Clydesdale Announced 0.65 percentage point decrease from next payment date, following both base rate cuts Announced 0.65 percentage point decrease from first payment date after 2 Apr, following both base rate cuts
Co-op Bank Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second
Coventry BS Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second Announced 0.5 percentage point decrease from 1 Apr, following both base rate cuts
First Direct Announced 0.5 percentage point decrease from 12 Mar after first base rate cut and an additional 0.15 percentage point decrease from 20 Mar, following the second Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Halifax Announced 0.5 percentage point decrease by 1 Apr after first base rate cut, waiting to hear following second Announced 0.5 percentage point decrease by 1 Apr after first base rate cut, waiting to hear following second
Hampshire Trust Bank Waiting to hear Waiting to hear
HSBC Announced 0.5 percentage point decrease from 12 Mar after first base rate cut and an additional 0.15 percentage point decrease from 20 Mar, following the second Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Investec Under review Under review
Kent Reliance BS Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second Waiting to hear
Landmark Mortgages Announced 0.65 percentage point decrease, following both base rate cuts Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Leeds BS Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear after second Under review after first base rate cut, waiting to hear after second
Lloyds Announced 0.5 percentage point decrease by 1 Apr after first base rate cut, waiting to hear following second Announced 0.5 percentage point decrease by 1 Apr after first base rate cut, waiting to hear after second
Metro Bank Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear after second
Nationwide Announced 0.5 percentage point decrease from 1 Apr after first base rate cut. An additional 0.15 percentage point decrease will apply from 15 Apr following second  Announced 0.5 percentage point decrease from 1 Apr after first base rate cut. An additional 0.15 percentage point decrease will apply from 15 Apr following second 
NatWest Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Newcastle BS Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second
Under review after first base rate cut, waiting to hear following second
NRAM Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
OneSavings Bank Under review after first base rate cut, waiting to hear following second Under review after first base rate cut, waiting to hear following second
Paragon Under review after first base rate cut, waiting to hear following second Under review after first base rate cut, waiting to hear following second
Post Office Waiting to hear Waiting to hear
Principality Under review following both base rate cuts Under review following both base rate cuts
RBS Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Sainsbury's Bank Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear following second Under review after first base rate cut, waiting to hear following second
Santander Announced 0.5 percentage point decrease from 1 Apr after first base rate cut. An additional 0.15 percentage point decrease will be applied from the beginning of May following second Announced 0.5 percentage point decrease from 1 Apr after first base rate cut. An additional 0.15 percentage point decrease will be applied from the beginning of Apr following second
Secure Trust Bank Waiting to hear Waiting to hear
Skipton BS Announced 0.65 percentage point decrease by 2 Apr, following both base rate cuts Announced 0.35 percentage point decrease from 1 May, following both base rate cuts
TSB Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, under review following second Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, under review following second
Ulster Bank Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts Announced 0.65 percentage point decrease from 1 Apr, following both base rate cuts
Virgin Money
Announced 0.65 percentage point decrease from 1 May, following both base rate cuts Announced 0.65 percentage point decrease from first payment date after 2 Apr, following both base rate cuts
West Brom BS Announced 0.5 percentage point decrease from 1 Apr after first base rate cut, waiting to hear after second Announced 0.5 percentage point decrease from 1 May after first base rate cut, waiting to hear after second
Yorkshire Bank Announced 0.65 percentage point decrease from next payment date, following both base rate cuts Announced 0.65 percentage point decrease from first payment date after 2 Apr, following both base rate cuts
Yorkshire BS Under review after first base rate cut, waiting to hear after second Under review after first base rate cut, waiting to hear after second

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 latest cuts, 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?

A second 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 even further, though if you have a fixed-rate account you are protected from rate drops for the time being.

Many savings accounts' rates are already under review following last week's base rate cut, with Barclays, Halifax, Lloyds, Metro Bank, Nationwide, OneSavings Bank, TSB and Yorkshire Building Society all telling us they were reviewing their interest rates – while NatWest, RBS and Ulster Bank have already announced interest cuts on some of their accounts due to the first drop.

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 the table below when we know more. For a full round-up of the current top picks, see Top Savings Accounts.

How the savings rate on your existing account will change

PROVIDER CHANGES TO VARIABLE SAVINGS ACCOUNT RATES
AA Waiting to hear
Bank of Ireland Waiting to hear
Bank of Scotland Waiting to hear
Barclays Under review after first base rate cut, waiting to hear after second
Beverley BS Waiting to hear
Birmingham Midshires Waiting to hear
Clydesdale Under review following both base rate cuts
Co-op Bank Under review after first base rate cut, waiting to hear after second
Coventry BS Waiting to hear
Cynergy  Under review after both base rate cuts 
First Direct Under review after first base rate cut, waiting to hear after second
Halifax Under review after first base rate cut, waiting to hear after second
Hampshire Trust Bank Under review after both base rate cuts, variable rate products 'potentially dropping'
HSBC Under review after first base rate cut, waiting to hear after second
Investec Under review after first base rate cut, waiting to hear after second
Kent Reliance BS Under review after first base rate cut, waiting to hear after second
Leeds BS Under review after first base rate cut, waiting to hear after second
Lloyds Under review after first base rate cut, waiting to hear after second
Marcus Under review after first base rate cut, waiting to hear after second
Metro Bank Under review after first base rate cut, waiting to hear after second
Nationwide Under review after first base rate cut, waiting to hear after second
NatWest Announced some savings accounts would reduce between 20 Apr and 20 Jun, including its Savings Builder which is dropping from 1.5% to 1% on 1 Apr. No further changes after second base rate cut
Newcastle BS Under review after first base rate cut, waiting to hear after second
NS&I Under review after first base rate cut, waiting to hear after second
OakNorth After first base rate cut, announced easy-access savings and ISA rates would reduce for existing customers on 1 May and rates for notice accounts will reduce for existing customers on 1 Jun (35 day), 1 Aug (95 day) and 1 Sep (120 day). Following second base rate cut, announced rates on fixed-term savings will be increasing
OneSavings Bank Under review after first base rate cut, waiting to hear after second
Paragon Under review after first base rate cut, waiting to hear after second
Post Office Waiting to hear
Principality Under review following both base rate cuts
RBS Announced some savings accounts would reduce between 20 Apr and 20 Jun, including its Savings Builder which is dropping from 1.5% to 1% on 1 Apr. No further changes after second base rate cut
Saga Under review after first base rate cut, waiting to hear after second
Sainsbury's Bank Under review after first base rate cut, waiting to hear after second
Santander Under review following both base rate cuts
Secure Trust Bank Waiting to hear
Skipton BS Under review after first base rate cut, waiting to hear after second
Tesco Bank Under review following both base rate cuts
TSB Under review following both base rate cuts
Ulster Bank Announced some savings accounts would reduce between 20 Apr and 20 Jun after first base rate cut, no further changes after second base rate cut
Virgin Money
Under review following both base rate cuts
West Brom BS Under review after first base rate cut, waiting to hear after second
Yorkshire Bank Under review following both base rate cuts
Yorkshire BS Under review after first base rate cut, waiting to hear after second