Bank of England Base Rate Cut: What It Means for Your Mortgage in 2025

Bank of England Base Rate Cut: What It Means for Your Mortgage in 2025

As of February 6, 2025, the Bank of England has announced a 0.25% reduction in its base rate, bringing it down to 4.5%. This is the third rate cut in six months, signaling a shift in monetary policy as the UK economy slows down.

But what does this mean for you as a homeowner, first-time buyer, or remortgaging client? Let’s break it down.

Immediate Impact on Mortgage Holders

If you’re on a tracker mortgage, you’ll feel the benefits immediately—your interest rate (and monthly repayment) will drop in line with the base rate. Similarly, Standard Variable Rate (SVR) mortgage holders could see reductions, though it depends on your lender.

Many lenders, including Lloyds, Barclays, HSBC, and Coventry Building Society, have already announced mortgage rate reductions in response to the Bank of England’s decision. If you’re on an SVR, now is a great time to review your options—you might be able to switch to a more competitive fixed-rate deal.

What About Fixed-Rate Mortgages?

If you're on a fixed-rate mortgage, your rate won’t change until your deal ends. However, this cut will impact new fixed-rate deals, making them more affordable in the coming months.