The Bank of England has cut the interest rate from 5.25% to 5% – the first drop in rates for a long time (since 2020).
It’s down to inflation coming down over the last year, to now 2%, which is the target for the Bank of England (inflation is the cost of things going up over time, and interest rates are used to control inflation).
This rate is the interest rate banks get for storing their money with the Bank of England, and affects things like savings rates and mortgage rates, who typically pass the changes into customers (but not always).
It means savings rates will likely come down a bit, if they haven’t already, but also loans and mortgage rates should come down too – meaning less to pay on new loans and your mortgage in future (often when you remortgage to a new deal).
If you’ve got lots of savings, make sure it’s getting a top rate – check out our best savings accounts for our top picks.
