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The Bank of England has today cut the base rate to 4% – the third cut this year.
Its nine-member Monetary Policy Committee (MPC) voted by a narrow 5-4 majority in favour of the 0.25 percentage point cut. Four members voted to maintain the rate at 4.25%, while one voted for a larger 0.5 percentage point cut.
Read on to find out what the decision means for you, whether you're buying a home, are due to remortgage or are trying to get the best return on your savings.
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The August rate cut had been widely anticipated, despite June's inflation figure ticking up to 3.6%.
In its latest report, the MPC cited 'subdued' economic activity and 'weak' employment growth as key factors in its decision. It also noted that geopolitical developments had 'not played a large role' in its discussions this time.
The committee concluded that 'a gradual and careful approach to the further withdrawal of monetary policy restraint remained appropriate'.
Simon Gammon, managing partner at Knight Frank Finance, said: 'Today’s rate cut sends a clear signal that the Bank of England is now more focused on slowing growth and rising unemployment rather than the threat posed by inflation. The split vote – with members supporting everything from a hold to a 50 basis point cut – underlines how finely balanced the decision was.'
For homeowners looking to remortgage, today's decision means that rates will continue to drift down.
The decline in mortgage rates is likely to be gradual, as the Bank of England continues its strategy of making slow, measured cuts to the base rate.
Since May’s previous cut, fixed-rate mortgage deals have shifted only slightly. The lowest 85% loan-to-value (LTV) mortgage has fallen by just 0.11 percentage points, while the lowest 75% LTV rate is unchanged.
Unless the economic outlook changes significantly, mortgage rates are unlikely to fall dramatically before the end of the year.
Richard Donnell, executive director at Zoopla, said: 'While today's cut in the base rate is welcome news for businesses and consumers, it's unlikely to make a major difference to the cost of mortgages for home buyers or deliver a boost to house prices. The price of fixed-rate mortgages already factors in the future path of base rates, meaning that average mortgage rates are likely to remain broadly where they are today.'
If you're currently on a standard variable-rate mortgage, your rate will drop by 0.25 percentage points. Tracker mortgages, which are linked to the base rate, will also be cut by 0.25 percentage points.
The table shows the current top rates for remortgaging across a range of LTV bands.
| Two-year fixed-rate | 60% | Halifax | 70% | 3.74% | £1999 | 7.74% |
| Two-year fixed-rate | 60% fee free | Santander | 71% | 4.05% | £0 | 6.75% |
| Two-year fixed-rate | 75% | Yorkshire Building Society | 68% | 3.93% | £995 | 5.99% |
| Two-year fixed-rate | 75% fee free | Yorkshire Building Society | 68% | 4.18% | £0 | 5.99% |
| Two-year fixed-rate | 85% | Newcastle Building Society | 71% | 4.85% | £999 | 6.50% |
| Two-year fixed-rate | 85% fee free | Clydesdale Bank | 71% | 4.99% | £0 | 7.24% |
| Two-year fixed-rate | 90% | Halifax | 70% | 4.54% | £1999 | 7.74% |
Table notes: Data from Moneyfacts, correct as of 7 August 2025. Customer scores are based on a survey of 3,556 members of the public in August-September 2024 and combine overall satisfaction with likelihood to recommend the provider. The average customer score is 70%. To become a Which? Recommended Provider a lender must get a top customer score, consistently offer competitive deals and be fully covered by the Financial Conduct Authority banking standards regime. 'Revert rate' is the standard variable rate (SVR), which is the mortgage rate you'd be transferred onto when your deal ended if it remained unchanged between now and then.
It’s a mixed picture for homebuyers. A gradual fall in fixed-rate deals will support affordability, but a larger cut would have had a bigger impact.
Nicholas Mendes, from mortgage broker John Charcol, said: 'A quarter-point cut won’t move the mortgage market dramatically, but it does keep the downward momentum going. Lenders are likely to trim rates further to stay competitive, especially with some already pricing in another cut before the end of the year.'
Which? analysis of Moneyfacts data shows that, since May, the best 90% LTV deal for home movers has fallen by 0.13 percentage points to 4.29%. For those with 95% LTV, the rate has dropped 0.09 points to 4.75%.
The table shows the current top rates for home-movers and first-time buyers.
| Two-year fixed-rate | 60% | NatWest | 71% | 3.77% | £1495 | 7.24% |
| Two-year fixed-rate | 60% fee free | RECOMMENDED PROVIDER First Direct | 75% | 4.03% | £0 | 6.74% |
| Two-year fixed-rate | 75% | Yorkshire Building Society | 68% | 3.84% | £995 | 5.99% |
| Two-year fixed-rate | 75% fee free | Yorkshire Building Society | 68% | 4.10% | £0 | 5.99% |
| Two-year fixed-rate | 85% | Yorkshire Building Society | 68% | 3.94% | £995 | 5.99% |
| Two-year fixed-rate | 85% fee free | Yorkshire Building Society | 68% | 4.20% | £0 | 5.99% |
| Two-year fixed-rate | 90% | Yorkshire Building Society | 68% | 4.26% | £995 | 5.99% |
Table notes: Data from Moneyfacts, correct as of 7 August 2025. Customer scores are based on a survey of 3,556 members of the public in August-September 2024 and combine overall satisfaction with likelihood to recommend the provider. The average customer score is 70%. To become a Which? Recommended Provider a lender must get a top customer score, consistently offer competitive deals and be fully covered by the Financial Conduct Authority banking standards regime. 'Revert rate' is the standard variable rate (SVR), which is the mortgage rate you'd be transferred onto when your deal ended if it remained unchanged between now and then.
The base rate cut spells bad news for savers with instant-access accounts, as most have variable rates linked to the base rate.
However, changes won’t happen overnight. It typically takes time for banks and building societies to adjust their rates after a cut.
Fixed-rate accounts are also expected to continue falling, in line with market expectations that rates will keep dropping slowly.
| Instant access | Chip | 5.1% (a) | £1 | Mobile app | Monthly |
| One-year fixed rate | LHV Bank | 4.5% | £1,000 | Mobile app | On maturity |
| Two-year fixed rate | JN Bank | 4.45% | £100 | Internet | Yearly |
| Three-year fixed rate | JN Bank | 4.45% | £100 | Internet | Yearly |
| Four-year fixed rate | JN Bank | 4.4% | £100 | Internet | Yearly |
| Five-year fixed rate | JN Bank | 4.52% | £100 | Internet | Yearly |
Table notes: rates sourced from Moneyfacts on 7 August 2025. No providers in this table had a sample size large enough for us to generate a Provider customer score. (a) Rate drops to 3% after three months
Find the right savings account for you using the service provided by Experian Ltd
Compare and chooseThe MPC has a further three meetings scheduled in 2025, with the next base rate announcement due on 17 September.
Experts predict there will be one further base rate cut this year, most likely in December.
Although, the timing of any cuts will depend on what happens to key economic indicators, such as inflation levels and economic growth, over the coming months.
This story is regularly updated after the latest base rate decision, with rate analysis and expert views. The last update was on 7 August 2025.
