Base rate cut is good news for borrowers, but savers need to act now to lock in a better rate

07 August 2025

Following today's base rate announcement by the Bank of England, Charles Resnick, Chief Finance Officer at Afin Bank, commented:

“The markets have been predicting a base rate cut since the last announcement back in June, so today’s 25bps drop to 4% is no surprise. But the MPC’s minutes and voting breakdown will be more illuminating as they will show how much of a split there is in the committee and give a hint at the future direction of base rate travel.

“At 3.6%, inflation is still way above the Bank of England’s 2% target, while signs of economic growth are thin on the ground. The country, and the markets, are holding their breath to see what Chancellor Rachel Reeves announces in her Autumn Budget later in the year and whether this would likely lead to further base rate cuts towards the end of the year and into 2026.

“For now, the lower interest rate brings relief to borrowers on tracker rate mortgages and may even spur on more first-time buyers, which would help stimulate the mortgage market. For savers it’s probably a good opportunity to review longer fixed term savings accounts that give them a guaranteed return on their money in 12 to 24 months’ time when the prevailing base rate could be significantly lower.”