MSE News

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

Naomi Schraer

News Reporter

19 March 2020

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

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

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

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

What will happen to savings rates?