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Barclays, HSBC and Nationwide reduce mortgage rates after Bank of England interest cut – see the full list
Plus, we explain how to search for a better deal
MORTGAGE lenders have swiftly reduced their rates following the Bank of England's decision to lower the base rate to 4.5% this afternoon.
This move is set to benefit thousands of borrowers, including those with Barclays, HSBC and Nationwide, who will see a decrease in their monthly repayments.
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Customers with Aldermore, Santander and Virgin Money can also expect adjustments in the coming days and weeks.
The rate cut comes after several lenders preemptively reduced their fixed mortgage rates in anticipation of the Bank of England's decision, marking the third base rate reduction since 2020.
For instance, Barclays lowered rates on purchase and remortgage products by up to 0.25 percentage points on Tuesday.
The base rate, set by the Bank of England's Monetary Policy Committee (MPC), influences the interest rates lenders charge for savings and borrowing, including mortgages.
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Earlier this afternoon, the MPC cut the base rate by 0.25 percentage points from 4.75% to 4.5%.
The reduction is expected to bring relief to millions of mortgage holders, whose bills will now decrease.
Why has the base rate been cut?
THE Bank of England uses interest rate adjustments as a tool to manage inflation, which tracks how quickly prices are rising across the economy.
When inflation is high, the BoE typically raises interest rates to discourage spending and slow price increases.
Inflation has now fallen significantly to 2.5% per year, close to the Bank's 2% target, after peaking in recent years.
At the same time, economic growth in the UK remains sluggish.
The Bank of England has said it expects the UK economy to grow by 0.75% in 2025, down from a previous forecast of 1.5%, before accelerating in 2026.
Lowering the base rate is intended to encourage greater spending and investment, providing a much-needed boost to the economy.
However, the reduction you'll see depends on the type of home loan you have.
Those on tracker and standard variable rate (SVR) mortgages typically see an immediate change in payments.
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A tracker mortgage is a type of variable mortgage where your monthly payments rise and fall in line with the Bank of England base rate.
With a tracker mortgage, you'll usually pay the base rate plus an additional percentage in interest each month.
A standard variable rate mortgage is what you revert to once any initial mortgage term ends.
What is the Bank of England base rate and how does it affect me?
This rate will change in line with the base rate and is usually higher than any initial introductory rate.
There are 629,000 customers on tracker mortgages and 693,000 on SVRs.
A 0.25% base rate cut will save the average SVR customer £359 per year and the average tracker mortgage customer £206 per year.
However, most mortgage customers won't benefit from today's change.
More than 6.8million customers on fixed-rate deals won't see any immediate changes.
This is because their rates remain the fixed until their agreed mortgage term ends, at which point they can take out a new deal.
Even if your lender has announced rate cuts, the timing of when your repayments decrease depends on your payment schedule.
We've listed all the lenders cutting mortgage rates below.
Aldermore
If you have a tracker or standard variable rate (SVR) mortgage with Aldermore, your mortgage rate will decrease by 0.25% on March 1, 2025.
For new customers, tracker and SVR rates will be repriced and adjusted earlier, taking effect from tomorrow (February 7).
Just yesterday, Aldermore announced reductions across several buy-to-let and residential mortgage products for both new and existing borrowers.
For new residential customers, two and five-year fixed-rate deals up to 80% loan-to-value (LTV) have been reduced by 0.2%, with rates now starting at 5.24%.
Three-year fixed-rate deals have also been cut by 0.15%, with rates now beginning at 5.64%.
Existing residential borrowers will also benefit from reductions, as fixed-rate deals up to 80% LTV have been lowered by up to 0.2%, with rates now starting at 5.44%.
Barclays
If you have a tracker or standard variable rate (SVR) mortgage with Barclays, your mortgage rate will decrease by 0.25% on March 1, 2025.
For new customers, tracker and SVR rates will be repriced and adjusted earlier, taking effect from tomorrow (February 7).
A Barclays spokesperson said: "Following the decision by the Bank of England to decrease its base rate, we will be decreasing our rates across tracker mortgage and Barclaycard products."
The lender's fixed-rate mortgages remain unchanged.
However, the bank did cut rates on fixed purchase and remortgage products by up to 0.25 percentage points on Tuesday.
HSBC
If you have a tracker mortgage with HSBC, your mortgage rate will decrease by 0.25% on tomorrow (February 7).
The bank stated that its residential standard variable rate (SVR) mortgage products are currently under review.
It added that any decision to reduce SVR rates will be promptly communicated to customers.
The lender's fixed-rate mortgages remain unchanged.
However, HSBC did make some changes to its fixed rate products ahead of the BoE announcement earlier this afternoon.
While two and five-year fixed rates at 90% loan-to-value (LTV) decreased, rates for two-year fixed fee-saver products, three-year fixes, and five-year fixed deals at lower LTV tiers rose.
Despite this, reductions did also apply to mortgages for first-time buyers, homemovers, energy-efficient properties, and most residential remortgage products, except for certain five-year fixed premier exclusive deals.
Nationwide
If you have a tracker or standard variable rate (SVR) mortgage with Nationwide, your mortgage rate will decrease by 0.25% on March 1, 2025.
Nationwide offers two types of Standard Variable Rate (SVR) mortgage products: the Standard Mortgage Rate (SMR) and the Base Mortgage Rate (BMR).
The product you are on depends on when you initially reserved your current fixed or tracker deal.
The key difference between the two is that the BMR is capped at no more than 2% above the Bank of England base rate, whereas the SMR has no upper limit or cap.
However, if you choose to switch away from the BMR product, you will not be able to return to it.
Following today's base rate cut, Nationwide has confirmed that, from March 1, the SMR will be set at 7.24%, while the BMR will be 6.50%.
The lender's fixed-rate mortgages remain unchanged.
Santander
If you have a tracker or standard variable rate (SVR) mortgage with Santander, your mortgage rate will decrease by 0.25% on March 3, 2025.
Santander’s tracker product, the Follow-on Rate (FoR), will drop from 8% to 7.75%.
While Santander SVR product will be reduced to 6.75% from 7%.
The lender's fixed-rate mortgages remain unchanged.
Virgin Money
If you have a tracker or standard variable rate (SVR) mortgage with Virgin Money, your mortgage rate will decrease by 0.25% on March 1, 2025.
For new customers, tracker and SVR rates will be repriced and adjusted earlier, taking effect from tomorrow (February 7).
Clydesdale Bank, a subsidiary of Virgin Money, will implement the same reductions.
Both lender's fixed-rate mortgages remain unchanged.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you're remortgaging and your loan-to-value ratio (LTV) has changed, you'll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home's value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you're nearing the end of a fixed deal soon it's worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal - but compare the costs first.
To find the best deal use a to see what's available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You'll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee - sometimes more than £1,000 - to the cost of the mortgage, but be aware that means you'll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you'll have to pass the lender's strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month's payslips, passports and bank statements.
What's next for mortgage rates?
Financial markets are exercising more caution regarding the pace of future interest rate cuts than previously anticipated.
While economists still predict three further cuts by the end of 2025, reaching a 4% base rate, this projection coincides with a revised inflation forecast.
The Bank of England now expects inflation to peak at 3.7% later this summer, higher than earlier estimates.
This upward revision is partly attributed to the impact of policies introduced in the October 2024 Budget.
Specifically, measures within the budget have contributed to a rise in cost inflation, pushing the overall inflation figure higher.
This presents a complex situation for the Bank of England, as rising inflation typically warrants higher interest rates to curb spending and stabilise prices.
Laura Suter, director of personal finance at AJ Bell, said: "Many homeowners will be baffled that despite multiple interest rate cuts, average mortgage rates are higher than they were a year ago.
"Even ahead of today's base rate cut, which looked like a dead cert, mortgage rates headed in the opposite direction.
"Two-year fixed rates are now higher than they were in November last year and only a smidge lower than February last year – despite two base rate cuts since then, while five-year rates are higher than two years ago."
She explains that homeowners can blame the recent chaos in the bond markets for their higher mortgage costs.
Although mortgage rates are influenced by the Bank of England’s base rate, they aren’t directly tied to it.
Instead, they depend on swap rates, which follow government bond yields. When the bond markets are unstable, yields rise, making it more expensive for banks to borrow money. This, in turn, pushes up mortgage rates.
As of today, the average two-year fixed mortgage rate stands at 5.50%, while the average rate for a five-year fixed deal is slightly lower at 5.30%, according to Moneyfactscompare.co.uk.
Meanwhile, the average two-year tracker mortgage rate is 5.46%.
Despite recent market turbulence, other experts remain confident that further interest rate cuts are inevitable, which will lead to reductions in mortgage rates as well.
Peter Stimson, head of product at the mortgage lender MPowered, said: "The markets had regarded a 0.25% rate cut as a nailed-on certainty.
"But what has raised some eyebrows is the strength of feeling among the Bank of England’s ratesetters today.
"The only two dissenting voices on the Bank's nine-member committee wanted to cut more, not less, off the Base Rate.
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“All of which will lend credence to the idea that a flurry of further base rate cuts could be on its way."
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