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Commenting on the MPC’s decision to reduce the Bank Rate by 0.25% to 4.75%, Andrew Gall, Head of Savings and Economics at the Building Societies Association said:
 
“As we expected the MPC has today cut the Bank Rate to 4.75%. This is likely to give a boost to consumer confidence and lead to an increase in housing market activity.
 
“However, shaving 0.25% off the Bank Rate will not be a magic wand for those trying to take their first step onto the property ladder. First-time buyers, who are critical for a properly functioning housing market, say that they are unable to afford homeownership. The BSA’s Property Tracker Report shows that raising a deposit and affordability of monthly mortgage payments are the biggest barriers to buying a home, and have been for many months.
 
“It's a different picture for those who are already mortgage borrowers who will welcome today’s announcement. Whilst those coming to the end of their fixed rate mortgage term still face a significant increase in their mortgage payments¹, the vast majority of existing borrowers are not worried about maintaining their mortgage payments. Just 2% said they are not at all confident they can keep up their repayments in the Property Tracker Report.
 
“Anyone who is concerned that they may experience financial difficulties in the coming months, should contact their lender as soon as possible, preferably before missing any payments. Lenders have a range of practical, tailored support available to anyone who may be struggling.
 
“Savers may be a little disappointed at the Bank Rate cut. However, with inflation below 2% (1.7%), most best buy savings rates, even with the latest cut, are likely to remain higher than inflation, meaning most savers will continue to enjoy real returns on their savings.”

Ends

Notes:

¹Payment differentials if remortgaging now compared to original loan

Example 1 – renewing a 2yr fixed rate mortgage @ 75% LTV

• The average loan size with a building society is £130,000 (成人头条Data)
• The average rate on a 2yr fixed mortgage at 75% LTV in September 2022 was 4.17%. On a 25-year loan the monthly mortgage repayments was £698.
• The average rate on a 2yr fixed mortgage at 75% LTV in September 2024 was 4.59%. On a 25-year loan the monthly mortgage repayments would be £729.

This is an increase of 0.42% points equating to an additional £31 per month

Example 2 – renewing a 5yr fixed rate mortgage @ 75% LTV

• The average loan size with a building society is £130,000 (成人头条Data)
• The average rate on a 5yr fixed mortgage at 75% LTV in September 2019 was 1.79%. On a 25 year loan the monthly mortgage repayments was £538.
• The average rate on a 5yr fixed mortgage at 75% LTV in September 2024 was 4.10%. On a 25 year loan the monthly mortgage repayments would be £693.

This is an increase of 2.31% points equating to an additional £156 per month