Martin Lewis says Bank of England rate change could mean £300 boost

Martin Lewis has explained the impact on people with mortgages of the interest rate cut announced by the Bank of England this lunchtime. The financial expert said that people could expect tracker rates to be cheaper by about £25 a month per £100,000 - meaning people with a mortgage of £200,000 could expect to save £300 a year.

The Bank of England cut interest rates to 4.75% at its November Monetary Policy Committee (MPC) meeting, the second reduction of UK borrowing costs in four months. Bank of England governor Andrew Bailey said: “We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much.

“But if the economy evolves as we expect it’s likely that interest rates will continue to fall gradually from here.”

Speaking on X immediately afterwards Mr Lewis said: “UK Bank of England Base rate DOWN 0.25% points to 4.75%. What it means for mortgages & savings. Mortgages: Tracker rates will get cheaper by roughly £25 per month per £100,000 (variable & discount rates should drop too but dont have to go by same amount)

“Your fixed rate mortgage will not change. Though the rate you can fix at may get cheaper (although as they’re based on predictions of future interest rate some of this cut is already baked in). Savings: Easy access rates are usually variable, so both cash ISAs and normal savings, will likely drop by around 0.25% points, though as its competitive at the top, some of the best may leave it a little later to drop.

“Your fixed rate savings will not change. Though the rate you can fix at may be reduced (although as they’re based on predictions of future interest rate some of this cut is already baked in).”

Inflation is expected to stay higher for longer than previously forecast following spending and tax rises announced in the autumn Budget, the Bank of England said. Headline consumer price index inflation is set to return to the Bank’s 2% target in the second quarter of 2027, about a year later than previously forecast.

Inflation will peak at about 2.8% in the third quarter of next year, before falling during 2026 and early 2027, partly pushed up by energy prices and the Budget measures. Policies in the Budget are forecast to add just under 0.5 percentage points to inflation in 2026.

Chancellor Rachel Reeves said the interest rate cut would be “welcome news” for millions of families but that households are still facing a challenge after Liz Truss’ mini-budget. “Today’s interest rate cut will be welcome news for millions of families, but I am under no illusion about the scale of the challenge facing households after the previous Government’s mini-budget,” the Chancellor said.

“This Government’s first Budget has set out how we are taking the long-term decisions to fix the foundations to deliver change by investing in the NHS and rebuilding Britain, while ensuring working people don’t face higher taxes in their payslips.” A new study has revealed the best exercise to take to lower blood pressure.

The Bank of England said increases to employer taxes and the minimum wage announced at the autumn Budget could be “more inflationary” if prices are passed on to consumers. Laying out the expected effects of the policies on Thursday, policymakers wrote: “On the one hand, higher labour costs could constrain firms’ cash-flows if there was limited pass-through to pricing.

“This in turn could moderate wage growth and further loosen the labour market through reduced labour demand. On the other hand, the increase in labour costs could prove more inflationary if upward pressure on prices were passed on to consumers.”

The pound strengthened after the Bank’s latest rate cut and as it hiked its inflation outlook, partly due to measures announced in the Budget. Sterling lifted 0.4% to 1.293 US dollars and was 0.2% higher at 1.202 euros.