Base rate cut to 4% – what should you do about it?

The Bank of England has cut its base rate to 4% this week. The base rate is what banks and building societies use to set their own interest rates, so any changes can impact your finances.

The base rate being cut means interest rates across mortgages and savings products tend to fall, while increases to the base rate lead to interest rates rising.

The winners from this latest rate cut are mortgages holders, particularly anyone on a tracker mortgage, which track interest rates, or anyone looking to remortgage soon. It’s also good for first-time buyers thinking of fixing into a deal.

The losers are people who are trying to diligently save, as savings account rates are likely to fall over the next few weeks and months.

What should you do about it?

If you are looking to remortgage or take on a mortgage, keep checking the latest deals to see if rates are reducing. If you have already agreed a deal but your current deal doesn’t end for a few months, or you haven’t completed on your house purchase yet, contact your broker or lender and see if you can switch onto a lower rate.

If you’re building up your savings, keep an eye on the rates on your accounts and don’t be afraid to switch to a better deal if your rates fall. Challenger banks often offer better deals than you can get on the high street, so be open minded – it could save you hundreds of pounds long term.

For those who don’t need to access their savings in the short term, fixing into a bond could be a way to get a better rate. Aldermore bank is offering 4.63% on its six month bond – that’s considerably higher than the average easy-access rate of 2.68% (as of July), according to Moneyfacts.