Bank of England cuts interest rates to 5% in August 2024 

The Bank of England has cut interest rates to 5% - marking the first cut since March 2020.     

How do interest rates affect me?  

Put simply, interest rates affect the cost of borrowing and returns on savings. The Bank of England’s base rate is what it charges other lenders to borrow money. This rate is then passed down to consumers through various channels such as the cost of mortgages, credit cards and loans, and the interest earned on savings.   

What a cut in interest rates could mean for you    

• Savings rates are likely to fall, meaning you could earn less interest on any non-fixed savings accounts.   

• If you’re on a tracker or variable-rate mortgage, your payments might decrease almost immediately. 

• If you’re looking for a new loan or credit card, you might be able to access lower interest rates. 

Commentary from Tobias Gruber  

Founder and CEO of My Community Finance, Tobias Gruber, said:   

“The Bank of England's decision to cut the base rate is a long-awaited relief for borrowers, but it's frustrating that it took this long. Homeowners and borrowers have struggled under high interest rates for an entire year despite inflation hitting the target. This cut should have come sooner.

For savers, the window to secure high interest rates is closing fast. When one provider changes their rates, others will follow quickly. Don’t wait—check your current savings rates and consider moving your money to an account that still offers higher rates. Fixed-rate savings accounts are still offering great rates, but locking in now could help you avoid losing out. Ensure you have emergency savings accessible since fixed-rate accounts typically don't allow withdrawals.

Don’t assume your bank is the best option. Banks have been slow to pass on interest rate increases to savers, a point even highlighted by the FCA last year. It’s crucial that you vote with your wallet to show banks that this doesn't pay. Online challenger banks, credit unions, and building societies are offering very competitive rates, so shop around to maximise your returns.”   

About Tobias Gruber   

Tobias Gruber is the founder and CEO of My Community Finance. For three decades, he’s been a prominent leader in investment banking and asset management for some of the sector’s most renowned banks, including Credit Suisse, SwissBank, JP Morgan and Morgan Stanley.   

In 2018, Tobias launched My Community Finance to provide access to credit for those overlooked by traditional lenders. The platform connects customers to credit unions, where they’re able to access competitive loan products.