Homeowners are set to save £384 extra each year if the base rate falls to 4.75 per cent as predicted, with market analysts confident that a 0.25 percentage point reduction is likely.

UK households set to wake up to £384 drop in mortgage payments tomorrow

by · Birmingham Live

A Bank of England interest rate cut could see mortgage repayments drop by £384 a year. After the Labour Party government Budget, homeowners are set to save £384 extra each year if the base rate falls to 4.75 per cent as predicted, with market analysts confident that a 0.25 percentage point reduction is likely.

Alastair Douglas, CEO of TotallyMoney, commented on the potential rate cut and said: "While the days of one to two per cent mortgages may feel like a distant memory, the Bank of England's rate cut will feel like good news to many. And hopefully, we'll see the trend continue into 2025, and beyond."

He said: "It might feel daunting having to pick up the phone and explain your situation, but lenders have been told by the government that they must act in the best interest of their customers. Around 4,000 homeowners will be seeing their current, cheap mortgage deals coming to an end each day.

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"But it’s important not to wait until then before locking in your next offer. Otherwise, your bank will put you onto their Standard Variable Rate — and these can reach almost nine per cent, resulting in a significant hike to your monthly payments. So start shopping around up to six months in advance.

"That’ll also be a good time to check that your credit report is correct and up to date. And if you find anything that doesn’t look right, you could file a request to fix any errors. That way you’ll put yourself in the best position to get the best deal for your situation.

"If you’re a saver, you should double-check the interest rate your bank is paying you, and if it’s not sitting comfortably above the current inflation rate of 1.7 per cent, then it’s time to move your money. Loyalty doesn’t pay, but some easy access accounts are offering customers more than 4.50 per cent."

Andrew Hagger, Personal Finance Expert at Moneycomms.co.uk added: "Mortgage customers are overdue a bit of good news, and a rate cut will help them feel more positive about their finances as they head into 2025."