Data from UK Finance shows how the Bank of England’s decision to cut rates by 0.25% to 4.25% will impact UK homeowners with outstanding residential mortgages.

This figures below show the average monthly payments and interest rates for various different mortgage types.

Tracker – average balance outstanding £139,042.

SVR – average balance outstanding £66,576

Fixed – average balance outstanding£167,691

In this representative calculation, the average current mortgage interest rate is 5.93%  for tracker; 7.38% for SVR and 3.65% for fixed.

Average current monthly interest payments are £687m £410 and £510 respectively and average total payments (for borrowers on capital and interest) are £991; £652 and  £943 for the three mortgage types.

UK Finance shows what will happen to average monthly payments for tracker and standard variable rate mortgages after the Bank of England’s latest cut to interest rates.

The 0.25% cut will reduce tracker payments by £28.97 per month (£347.64 a year)  and SVRs by £13.87 (£166,44 per year) – those on fixed rate mortgages will obviously see no changes to their monthly payments.

The Bank of England ‘s rate-setting Monetary Policy Committee voted in a 5 to 4 split in favour of reducing the rate, which affects a wide range of consumer loan agreements from credit card to mortgage payments.

Two members preferred to reduce bank rate by 0.5 percentage points to 4% while the other two members preferred to maintain bank rate at 4.5%

The financial markets are forecasting two-to-three more Bank Rate cuts in 2025, which could take us to a rate of 3.75% by the end of the year.