Bank of England cuts base rate to 4.75% – what it means for you and how much further it could fall

This is the second time this year that the Bank has cut the rate, after it fell from 5.25% to 5% in August. Here's what you need to know, plus how mortgage rates are changing in reaction.

Martin Lewis: What the base rate cut means for your mortgage and savings

Below is Martin's instant reaction to the Bank of England's announcement, which you can also read on X, formerly known as Twitter:

We've more on the impact for mortgage borrowers and savers below.

Why the base rate was cut

The Monetary Policy Committee (MPC) voted by a majority of eight to one to reduce the base rate by 0.25 percentage points to 4.75%. Eight members voted to reduce the rate to 4.75%, while one voted in favour of maintaining the rate at 5%. Explaining the reasons for its decision, the Bank said "there had been continued progress with disinflation".

The base rate is used by the Bank of England as a tool to control inflation (the rate at which prices rise). It has a target of 2% for the Consumer Prices Index (CPI) measure of inflation, which is set by the Government. The latest figures show that CPI inflation fell to 1.7% in September 2024, its lowest level since April 2021.

However, the Office for Budget Responsibility expects CPI to rise above the Government's target level to 2.6% next year. It says this is due to measures announced in the Autumn Budget, including increased Government spending, as well as a National Insurance rise for employers, which is expected to result in higher prices for consumers.

Will the base rate fall further?

Experts say that an expected rise in inflation, coupled with an increase in Government borrowing also announced in the Budget, could slow down the rate of any future base rate cuts.

Paul Dales, chief UK economist for research firm Capital Economics, said: "We no longer think rates will be cut quicker in the second half of 2025 and we now think rates will fall only as far as 3.5% in early 2026 rather than to 3%. Note this change is driven by the UK Budget and not the US election."

Susannah Streeter, head of money and markets at financial service firm Hargreaves Lansdown, added: "If the dollar continues to strengthen, it could increase the costs of goods imported into the UK, adding to inflationary pressures. This means that the Bank is likely to go a bit slower than previously expected in bringing in rate cuts. A move below 4% by the end of next year looks more unlikely, but a lot can change between now and then."

I have a mortgage – what does this mean for me?

Here are the key need-to-knows for mortgage borrowers:

• For those on a fixed mortgage deal, there's no change for now. Regardless of what happens to the base rate, the amount you pay WON'T change during your fixed period.
  
  However, if you're within the last few months of your fix, you might want to look at new deals now – especially if you value certainty. You can usually lock in a new rate three to six months ahead of time, which prevents you from rolling on to your lender's costly standard variable rate (SVR) and can act as insurance against interest rates rising before your current deal ends.
  

• If you're on a tracker mortgage that 'tracks' the base rate, you'll see your rate come down. Plus a change to your monthly repayment within days or weeks, depending on when your next repayment is. See our table below for a lender-by-lender breakdown.
  

• If you're on your lender's SVR, the rate you pay MIGHT also come down. You're usually moved on to your lender's SVR after your fix or tracker deal ends. SVRs can be changed by lenders at a whim, though normally it coincides with changes to the base rate. See our table below for a full lender-by-lender breakdown.
  
  SVRs are typically far more costly than fixed and tracker deals – currently they tend to range between 7% and 8%. You should check if you can save by switching now (which is likely).

Mortgage changes lender-by-lender

I'm a saver – what will happen to rates?

Since the base rate was last cut in August, savings rates have fallen across the board. This latest cut means that they're set to continue to decrease, with 4.7% to 4.9% likely to be the benchmark in the next few weeks.

We contacted all major providers to ask them what they're doing in response to the base rate cut. So far, two providers have confirmed cuts:

• Chase will cut the rate on its standard linked saver from 3.75% to 3.5% from Thursday 14 November.

• Co-op Bank will cut the rate on six of its variable savings accounts by 0.07 percentage points from 22 January 2025, while the rate on its 'Base Rate Tracker' account will decrease by 0.25 percentage points from 14 November 2024.

Many others, including Barclays, HSBC, Lloyds, Nationwide and TSB, told us they'd be reviewing their rates – meaning they'll likely follow.

Check you're getting the best possible savings rate

So how can you maximise your savings? As MoneySavingExpert.com founder Martin Lewis said in the Money Tips email last week, the first step is to check your interest. Millions are on pants rates, and can easily and simply move their money to where it pays more. And if you're on a fix, diarise to act before it ends.

At the very least, you should be getting the top standard easy-access rate. Currently, two top easy-access cash ISAs beat top normal savings rates, so they're a winner for anyone who hasn't already maxed this year's £20,000 ISA allowance.

Both Trading 212 and Moneybox pay 5.17% and allow you to transfer in all the money you have in previous years' cash ISAs. It's worth noting that Trading 212's savings safety protection comes from Barclays, NatWest, or JPMorgan. See our Cash ISAs guide for full info.

If you've used up your ISA allowance and have more to save, the top rate for a normal easy-access saver is with Vanquis Bank at 4.85% – plus you can make unlimited withdrawals.

Got money to lock away? The benefit of fixed-rate savings is certainty, but in return, your money is locked away without access. Oxbury Bank is currently offering 4.8% for a three-month fix and 4.76% for a six-month fix, both with minimum deposits of £1,000.

As rates continue to fall, the key is to regularly monitor what you're getting compared to the top rates available. Ditching and switching easy access is easy – keep an eye on our Best savings rates guide.