Mortgage News: Bank of England Makes Second Shock Base Rate Cut to 0.1%
Last week the Bank of England cut the base rate from 0.75% to 0.25% which was considered by many to be a drastic move which brought interest rates down to historical lows.
The base rate is the official interest rate of the Bank of England which is used by other banks and financial institutions as a measure of how much they should be charging borrowers and paying savers in interest.
This was done to try and combat the economic challenges being presented by the spread of Covid-19 throughout the world.
But today, news has just broken that the Bank of England is making a further cut to their base rate – cutting it down 15 points to 0.1%.
Why has this happened?
The economy continues to suffer due to the outbreak of coronavirus; this drastic cut in base rate is part of the Bank of England’s strategy to shore up an economy in shock.
This the second dramatic cut within two weeks – and this new base rate is the lowest in the Bank’s history of 325 years.
In a statement given on Thursday 19th March 2020, the newly-minted Bank of England governor Andrew Bailey stated:
“It’s obviously an emergency – a very serious situation…we made a very big intervention…the same day as the budget.
That was the right thing to do. It’s striking – here we are a week later: how much it’s moved on, how rapidly moved on, it’s entirely sensible that we take more measures together this week…
…I think we’re all expecting of course that this will be temporary…it’s important that it meets the need, so we haven’t put a number on it at the moment”
What does this mean for me?
The main things that the base rate impacts are:
- Mortgage rates
- Interest rates
So, this is good news for those on tracker mortgages (assuming mortgage providers pass on these cuts to their borrowers – read our blog for more) but not the best news for savers, whose interest rates will be considerably lower.