{"id":1833,"date":"2025-05-16T07:30:41","date_gmt":"2025-05-16T06:30:41","guid":{"rendered":"https:\/\/www.redstarwealth.co.uk\/blog\/?p=1833"},"modified":"2025-05-15T15:54:04","modified_gmt":"2025-05-15T14:54:04","slug":"how-does-the-new-4-25-base-rate-affect-my-mortgage","status":"publish","type":"post","link":"https:\/\/www.redstarwealth.co.uk\/blog\/how-does-the-new-4-25-base-rate-affect-my-mortgage\/","title":{"rendered":"How Does the New 4.25% Base Rate Affect My Mortgage?"},"content":{"rendered":"

The Bank of England recently cut their base rate to 4.25% down from 4.5% on 8th<\/sup> May 2025.<\/p>\n

Why Has the Base Rate Fallen?<\/h2>\n

The Monetary Policy Committee (MPC) voted by a majority of 5-4 to reduce the base rate by 0.25% down to 4.25% on 8th<\/sup> May 2025. 5 members voted to take the base rate to 4.25%, while two voted to keep it where it was at 4.5%, and two voted to reduce it by a larger amount to 4%.<\/p>\n

According to the Bank of England<\/a>:<\/p>\n

\n

\u201cThere has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations. That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.\u201d\u00a0<\/strong><\/p>\n<\/blockquote>\n

Mortgages<\/h2>\n

How much you are affected by the change in base rate will depend on what type of mortgage you have.<\/p>\n

Data<\/a> from the Bank of England shows that most people with mortgages have a fixed interest rate, where you agree upon an interest rate with the lender and this remains the same for a fixed period of time. 86% of outstanding UK mortgages were being repaid at fixed interest rates in July-September 2022.<\/p>\n

This means for the vast majority of borrowers, the change to the base rate does not mean their mortgage will get cheaper right now.<\/p>\n

Fixed Rate Mortgages<\/h2>\n

Those on fixed rate mortgages won\u2019t see a change to their monthly mortgage payments for now, as these remain fixed for the loan term. However, you can usually lock in a new rate up to 3-6 months before your current deal ends to avoid being automatically moved to a standard variable rate.<\/p>\n

So, if you\u2019re due to come out of your current deal soon, this news is good for you as rates should be lower than they were before this 0.25% base rate drop.<\/p>\n

Tracker Mortgages<\/h2>\n

For those on tracker mortgages, the interest rate tends to track the Bank of England\u2019s base rate, rising when the base rate goes up and falling when the base rate is reduced. This is not to say that the interest on tracker mortgages matches the base rate, just that it follows it \u2013 the interest rate tends to be set just above the base rate (e.g, 1% above).<\/p>\n

As we have seen a fall in the base rate, those on tracker mortgages should also see their mortgage rate come down.<\/p>\n

Standard Variable Rate Mortgages<\/h2>\n

Standard variable rate mortgages can change at any time, and may or may not be affected by this change to the base rate.<\/p>\n

Any changes to the rate will be decided by your lender, but this will often change along with the base rate.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Bank of England recently cut their base rate to 4.25% down from 4.5% on 8th May 2025. Why Has the Base Rate Fallen? The Monetary Policy Committee (MPC) voted by a majority of 5-4 to reduce the base rate by 0.25% down to 4.25% on 8th May 2025. 5 members voted to take the […]<\/p>\n","protected":false},"author":7,"featured_media":1834,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false},"categories":[1],"tags":[46,1195,47,1444,1613,1611,1614,1519,103,44,45,1248,1171,1205,97,1520,1610,1524,1527,1525,1197,1612],"yoast_head":"\nHow Does the New 4.25% Base Rate Affect My Mortgage? - Red Star Wealth<\/title>\n<meta name=\"description\" content=\"The Bank of England recently cut their base rate to 4.25% down from 4.5% on 8th May 2025. 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