The Bank of England has cut the base interest rate to 4.25% from 4.5%, continuing its efforts to ease financial pressure while maintaining economic stability.
This change carries significant implications for homeowners, businesses, and savers across Northern Ireland.
What Does It Mean for Homeowners?
If you have a tracker mortgage, your monthly payments could drop by £30–£50, depending on your lender.
Those with variable-rate mortgages may also see a reduction, though the exact decrease will vary from lender to lender and will take some time to change.
Experts believe this adjustment could bolster confidence in the housing market, helping buyers and sellers navigate property transactions more smoothly.
What to do about your mortgage?
- Fixed mortgage holders—no immediate changes – If you're on a fixed-rate mortgage, the amount you pay won't change until your fixed period ends. You can typically secure a new deal three to six months before your current one expires, saving you from rolling onto a standard variable rate (SVR).
- Tracker mortgage holders—rates are decreasing – If your mortgage follows the base rate, you’ll see your payments go down. The change will reflect in your monthly repayments within days or weeks, depending on your lender’s timeline.
- SVR mortgage holders—your rate may drop – If you're on an SVR (which usually follows the base rate), your lender might lower your rate. However, SVR rates can be changed at any time by lenders.
The Effect on Savings and Loans
While lower interest rates make borrowing more affordable, savers may feel the impact. Easy-access savings accounts will have interest rate reductions of 0.25%, meaning slightly lower returns.
Fixed-rate savings have already factored in the base rate changes so minor changes may occur. Businesses looking to borrow could benefit from the reduced rates, which may make financing more accessible and cost-effective.
The Bigger Economic Picture
The Bank of England attributes this cut to steady progress in reducing inflation, which has been falling consistently. The Northern Ireland Executive reports that GDP growth in Q1 2025 reached 1.2%, slightly lower than previous estimates.
Economists warn that while lower interest rates can aid borrowing and investment, they may also slow economic growth in the long term.
Looking Ahead: What’s Next?
Further rate cuts are expected later in 2025, though analysts predict they may be more gradual than initially forecast.
If you are a homeowner, saver, or business owner, now is the time to reassess your financial strategy and consider how these changes might impact your plans.
Now is a great time to speak with your lender or financial advisor to ensure you're making the most of these changes.
Talk an expert financial advice
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The Reeds Rains Content Marketing Team
