Chamber News
UK interest rates cut to 5%
2 August 2024 • Sarah Medcraf
The Bank of England's governor said a decision to cut interest rates is “an important moment in time” but warned people not to expect a sharp fall in the coming months.
In a closely-run decision, rates were lowered to 5% from 5.25% on Thursday, marking the first cut since the start of the pandemic in March 2020.
Interest rates dictate the cost of borrowing set by High Street banks and money lenders for the likes of mortgages and credit cards.
Interest rates have climbed over the last few years, as the Bank has battled to control soaring price rises.
The higher rates have put pressure on household finances, although returns for savers have improved.
The fall to 5% means that homeowners on tracker mortgages will see an immediate reduction in their monthly mortgage payments. Those on variable rate deal may also benefit from the fall.
But many homeowners on fixed rate mortgages still face the prospect of much higher mortgage rates when those deals expire over the next few years.
There are hopes that falling interest rates will improve consumer confidence, which has been subdued of late.