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The Bank of England has today reduced its base rate from 4.5% to 4.25%.
The Bank's nine-person Monetary Policy Committee (MPC) voted 5-4 in favour of cutting the rate by 0.25 percentage points.
Read on to find out what the rate cut means for you – whether you're buying a home, remortgaging or looking for the best return on your savings.
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For the second time this year, the base rate has been reduced by 0.25 percentage points, bringing it down to 4.25% with immediate effect.
The cut had been widely anticipated, following concern over the impact of Trump's tariffs on economic growth and the news that inflation dipped to 2.6% in March.
In its report, the MPC said there had been 'substantial progress on disinflation over the past two years' and that 'uncertainty surrounding global trade policies has intensified since the imposition of tariffs by the United States'.
If you've been keeping an eye on mortgage rates, you'll know they've been falling since January – and those cuts have gathered pace since mid-April.
Because lenders had already expected today's cut to the base rate, it's unlikely to make a big difference to fixed-rate deals right now. The Bank of England highlighted this in its report, noting that 'almost all respondents' to its latest Market Participants Survey expected a 0.25 percentage point cut.
Still, with more than a million homeowners expected to remortgage before the end of the year, today's decision is a welcome development, as fixed rates are expected to continue to fall.
If you're on a variable-rate mortgage, your rate should fall. Trackers, which are linked to the base rate, will drop by 0.25 percentage points.
Standard variable rate (SVR) mortgages and discount mortgages will fall if individual lenders reduce their SVRs in response to the announcement.
We've rounded up the current top rates for remortgaging across a range of loan-to-value ratios for two-year and five-year fixed-rate mortgages.
| Two-year fixed-rate | 60% | NatWest | 71% | 3.88% | £1495 | 7.49% |
| Two-year fixed-rate | 60% fee free | Barclays | 68% | 4.18% | £0 | 6.49% |
| Two-year fixed-rate | 75% | Barclays | 68% | 3.99% | £899 | 6.49% |
| Two-year fixed-rate | 75% fee free | Barclays | 68% | 4.27% | £0 | 6.49% |
| Two-year fixed-rate | 85% | HSBC | 70% | 4.24% | £999 | 6.74% |
| Two-year fixed-rate | 85% fee free | Barclays | 68% | 4.45% | £0 | 6.49% |
| Two-year fixed-rate | 90% | HSBC | 70% | 4.54% | £999 | 6.74% |
Table notes: Data from Moneyfacts, correct as of 8 May 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.
That depends on your situation – and how much risk you’re comfortable with.
Nicholas Mendes of mortgage broker John Charcol says it's worth reviewing your options early if your current deal is coming to an end.
Mendes said: 'For borrowers approaching the end of a fixed-rate deal, reviewing your options early is crucial. While rates are on a downward trajectory, there is no guarantee that today’s deals will still be available in a few weeks or months.
'Fixing your mortgage rate now offers protection from unexpected changes in market sentiment and the peace of mind of consistent monthly repayments. However, for those who are still several months away from needing to remortgage and are comfortable taking some risk, there may be further improvements to come.'
The past few years have been frustrating for those looking to move home, as high borrowing costs have significantly impacted affordability.
First-time buyers and home movers will hope that the decision will encourage lenders to continue expanding the number of sub-4% mortgage deals.
Mendes said: 'By the end of the year, we could see leading two-year fixed rates settle around 3.5%, with five-year fixes close behind at approximately 3%.'
While this is good news for home buyers, it also highlights that rates aren't expected to drop dramatically before the end of the year.
We've rounded up the current top rates for home movers and first-time buyers across a range of loan-to-value ratios for two-year and five-year fixed-rate mortgages.
| Two-year fixed-rate | 60% | NatWest | 71% | 3.88% | £1495 | 7.49% |
| Two-year fixed-rate | 60% fee free | Barclays | 68% | 4.18% | £0 | 6.49% |
| Two-year fixed-rate | 75% | Barclays | 68% | 3.99% | £899 | 6.49% |
| Two-year fixed-rate | 75% fee free | Barclays | 68% | 4.27% | £0 | 6.49% |
| Two-year fixed-rate | 85% | HSBC | 70% | 4.24% | £999 | 6.74% |
| Two-year fixed-rate | 85% fee free | Barclays | 68% | 4.45% | £0 | 6.49% |
| Two-year fixed-rate | 90% | HSBC | 70% | 4.54% | £999 | 6.74% |
Table notes: Data from Moneyfacts, correct as of 8 May 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.
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Today's announcement means bad news for savers. The rate cut is likely to lead banks to continue reducing the interest they offer on savings accounts - a blow to people looking for the best return on their money.
Fixed-rate accounts had already priced in the base rate cut, with rates falling over the past month, as providers revised estimates of where the base rate will be during the next year.
At the start of May, for example, the average rate on a one-year fixed-rate savings account recorded its largest month-on-month drop in more than six months.
Now, it's variable-rate accounts that are most likely to see the sharpest cuts in the coming weeks.
That said, changes may not happen straight away. In the past, some providers have taken more than a month to pass on base rate changes.
Our table sets out the top savings rates at the moment across instant-access and fixed-rate accounts.
| Instant access | Cahoot | 5% (a) | 61% | £1 | Internet | Monthly, yearly |
| One-year fixed rate | Sensible Savings | 4.58% | n/a | £5,000 | Internet, postal | On maturity |
| Two-year fixed rate | Sensible Savings | 4.51% | n/a | £5,000 | Internet, postal | On maturity (compounded annually) |
| Three-year fixed rate | Sensible Savings | 4.5% | n/a | £5,000 | Internet, postal | On maturity (compounded annually) |
| Four-year fixed rate | JN Bank | 4.48% | n/a | £100 | Internet | Yearly |
| Five-year fixed rate | JN Bank | 4.48% | n/a | £100 | Internet | Yearly |
Table notes: rates sourced from Moneyfacts on 8 May 2025. Provider customer score is based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score. (a) 5% AER on balances up to £3,000
Find the right savings account for you using the service provided by Experian Ltd
Compare and chooseThe MPC has adopted a cautious approach to reducing the base rate, while keeping a close watch on the risk of inflation rising.
Experts expect the base rate to fall further over the next year, but don't anticipate it will return to the very low levels recorded during the past decade.
Updated estimates, following the announcement of Trump's tariffs, suggest the base rate will be cut twice more before the end of the year.
However, recent events have shown how quickly these estimates can change if the outlook for economic growth or inflation changes.
The MPC recognises this and confirmed it 'will remain sensitive to heightened unpredictability in the economic environment and will continue to update its assessment of risks'.
