Bank of England cuts interest rates but what are the real impacts for people in London?

The recent Bank of England base rate cut from 4.5% to 4.25% has many implications for people in the UK, mainly with mortgages, savings, credit cards, and loans. Here is a quick breakdown of each and how it might impact you.

Renting

• The rate cut doesn’t directly impact rent prices, but it effects the housing market. Landlords with mortgages might pass on any new costs to tenants.
• If purchasing a house becomes more popular because of lower rates, it may mean less rental properties on the market.
• Renters should stay informed and consider discussing any concerns with their landlords.

Savings

• Easy-Access Savings Accounts:  Easy-access accounts, are likely to see a reduction in interest rates within two to four weeks by approximately 0.25 percentage points.
• Fixed-Rate Savings Accounts: While existing fixed-rate savings accounts remain unaffected, new fixed-rate deals may offer slightly lower rates due to the base rate cut.

 Credit Cards

• Credit card interest rates are usually high and may not change immediately following a rate cut. However, some lenders might start doing better 0% interest rate deals.

 Loans

• Existing Loans: Fixed-rate loans remain unaffected by the base rate cut.
• New Loans: The cost of new loans might go down slightly, as lenders adjust their rates after the cuts.

Mortgages

• Fixed-Rate Mortgages: If you’re on a fixed-rate mortgage, your monthly payments stay the same. Bu the rate for new fixed deals may go down slightly.
• Tracker Mortgages: For those with tracker mortgages, the interest rate will result in an approximate monthly saving of £28.97 for a £100,000 mortgage .

Our director of Advice Services Matt Dronfield said this about the rate decrease;

“Understanding these changes is crucial for making informed financial decisions. Whether you’re navigating the rental market, saving for the future or managing a mortgage, staying informed helps you make choices to help your financial goals.”

For residents of East London, staying informed about these developments is very important. No matter your financial position, keeping up to date and understanding how it will affect you is key. If you need assistance with debt or benefits in particular, make sure to go to our advice services page and make an inquiry.