Major lenders including Barclays, HSBC and Nationwide have slashed their mortgage rates in response to the Bank of England’s recent interest rate decision. The Bank of England has trimmed its base rate from 4.75 per cent to 4.5 per cent, which will result in immediate monthly payment reductions for those with tracker mortgages.
Standard variable rate (SVR) deals can also be impacted by the base rate, although it’s up to individual lenders whether they choose to pass on any increases or deductions. Typically, you’ll revert to an SVR once your current mortgage deal concludes.
If you’re on a tracker mortgage, you can expect your monthly payments to drop by nearly £29 on average following the base rate cut. For those on an SVR, the average saving is around £17 a month, provided the full base rate reduction is passed on, reports the Mirror.
However, if you’re on a fixed rate deal, your monthly mortgage payments will remain unchanged until your fixed period terminates. Approximately one million fixed rate deals are due to expire in 2025, with around 690,000 on three, four, or five-year fixed terms.
This means these individuals could face significantly higher costs when they come to remortgage, given the elevated interest rates compared to before the rise in 2022.
How have the banks responded?
Barclays
Barclays is reducing tracker and SVR rates for existing customers by 0.25 percentage points as of March 1, 2025, while new products are being adjusted by the same amount today. The bank also reduced rates on fixed products by up to 0.25 percentage points on Tuesday.
Nationwide
Nationwide has also announced a reduction of 0.25 percentage points on its tracker and SVR mortgages from March 1, 2025, though no changes to its fixed rate deals have been disclosed.
HSBC
HSBC has trimmed its tracker mortgages by 0.25 percentage points effective immediately, while its SVR products remain under review. The bank also lowered some of its fixed rates yesterday, ahead of the Bank of England decision.
Santander
For Santander customers with a tracker or SVR mortgage, expect your rate to drop by 0.25 percentage points on March 3, 2025. However, the bank has not revealed any alterations to its fixed rate products.
Virgin Money
If you’re with Virgin Money, your tracker or SVR mortgage will decrease by 0.25 percentage points on March 1, 2025. New tracker and SVR rates have been reduced from today, but no changes have been announced for its fixed rate deals.
How to cut your mortgage costs
If you’re due to remortgage, you can normally lock in a new deal at least three months before the end of your current one. You should make sure your remortgage is scheduled to complete after your existing deal finishes, to avoid paying an early repayment charge.
In terms of choosing how long you want your new mortgage to run for, consider if your circumstances are likely to change during that period and if you’re comfortable with those repayments. The longer you fix for, the more certainty you’ll have over how much you’re paying.
However, if interest rates continue to fall, you wouldn’t benefit from any rate reductions until your fixed period ends – but if rates were to go up, you’d be protected from any increases. You can speak to a mortgage broker who will be able to run through different options with you, just make sure you check first if they charge any fees.