Home owners in Northern Ireland on a tracker mortgage will see their monthly payments fall by £28.98 following Thursday’s 0.25 percentage point cut on UK interest rates, according to UK Finance analysis.
And someone on a standard variable rate (SVR) mortgage will pay £17.17 less each month after the Bank of England’s Monetary Policy Committee (MPC), as was widely flagged, announced a base rate cut from 5% to 4.75%.
Around four-fifths of outstanding home-owner mortgages in the UK (some 6,882,000) are on fixed-rate deals, however, and will not see any immediate change in their payments.
And following a Bank of England forecast that inflation will creep higher in the wake of measures introduced in Chancellor Rachel Reeves' inaugural Budget, analysts are now suggesting interest rates could take longer to fall further.
Bank governor Andrew Bailey said rates were likely to “continue to fall gradually from here“, but cautioned they could not be cut ”too quickly or by too much”.
Investors now do not expect any further rate cuts this year with the Bank likely to hold rates at its next meeting in December.
Capital Economics economist Paul Dales said it now expected rates to fall slower to only 3.5% in early 2026, rather than to 3%.
Eight of the Bank’s MPC committee members voted in favour of cutting the base rate, versus one who preferred to keep it unchanged ( Catherine Mann voted to maintain it at 5%).
Ross Boyd, founder and director of Belfast-based chartered accountancy RBCA, believes the MPC’s slow and steady approach on interest rate cuts is a wise one from the Bank of England.
He said: “While this is the second easing of the base rate this year, it’s not as dramatic as we might have expected just a few weeks ago when it looked like interest rates were on a clear path down.
“And that’s not surprising. While last week’s seismic Budget didn’t change the MPC’s decision to cut rates, its impact, with the Bank of England now expecting inflation to peak at around 2.75% by the middle of next year and stay above target in 2026 before falling back in 2027, along with Donald Trump’s election victory, means many economists’ long-held view that rates would fall rapidly from now has been brought into question.
“It’s unclear, for example, if growth beyond the forecasts will happen. The Budget looks likely to push inflation up, and no betting man could be sure planned reforms will improve things. With such uncertainty in the air on these crucial questions, it now seems likely base rates will fall slowly in the period ahead.
“To make any significant move from here, the markets need to see detailed plans for growth. In the meantime, a slow and steady approach from the Bank of England is a wise one.”