Bank of England base rate lowered to 4.25% - but what does this mean for mortgage rates?
In a move welcomed by many, the Bank of England has cut interest rates from 4.5% to 4.25% - the lowest rate since May 2023.
A lower base rate is designed to boost spending by making borrowing, including mortgages, cheaper - but cutting rates means savers get lower returns.
At its meeting ending on 7 May 2025, the Bank of England's Monetary Policy Committee voted by a majority of 5–4 to reduce Bank Rate by 0.25 percentage points, to 4.25%. Two members preferred to reduce Bank Rate by 0.5 percentage points, to 4%. Two members preferred to maintain Bank Rate at 4.5%.
The cheapest mortgage rates start at just over 3.8%, and now that the base rate has come down, they may well get lower over the coming weeks.
Given the scale of fixed-rate price reductions we have seen recently, it is a good time to take a mortgage. We hope the cheapest fixed rates get closer to 3.5% this year, meaning many people will have more money to spend and boost the economy.
Chancellor Rachel Reeves was quoted on the BBC website as saying: "This interest rate cut is welcome news, and the fourth since we came into government making it cheaper for businesses to borrow, reducing the cost of a new mortgage, making homeownership more accessible, car finance more affordable and easing the pressure on those paying off personal loans. But there is more to do, and I know families are still facing cost of living pressures."
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The information contained within was correct at the time of publication but is subject to change.
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