The Bank of England has cut the base rate to an all-time low amid fears the Coronavirus outbreak will negatively impact the economy.

The rate has returned to 0.25 per cent, the lowest it has ever been, in a bid to give the economy more of a safety net.

The move comes ahead of the budget, due to be announced today, and is the first cut since August 2016.

Kingswood chief investment officer Rupert Thompson says:  “The rate cut itself is probably of most importance symbolically as it is unlikely to be particularly effective in mitigating the looming disruption from the coronavirus. Importantly, however, it is being accompanied by measures to relax capital rules for the banks so they can provide more support for struggling businesses.

“Moreover, today’s budget will very likely relax controls on day-to-day government spending. This should provide additional support to the economy over coming months. A large increase in investment spending is also planned but inevitable delays in implementing it means this will be much less helpful in boosting the economy short term.

“Despite these various moves by the authorities, the UK economy – like many other economies round the world – will struggle to escape a short-lived recession over coming months.”

Mortgage Market Alliance director Rob Griffiths says: “A cut to Bank Base Rate is always significant, however when it’s an emergency measure taken outside the normal Monetary Policy Committee meetings, then it’s doubly significant.

“The Bank clearly wants to stimulate the flow of lending out to consumers and businesses and for those seeking a new mortgage or looking to refinance, this is now an opportune time to do so. While many lenders’ cost of funds and pricing will not be directly linked to Bank Base Rate, this is still likely to filter through to mortgage rates at some level, which means what was an already highly-competitive market has just got even more so. There are likely to be considerable savings available, especially if the borrower is sat on their lender’s Standard Variable Rate, and the best way to access all the mortgage market has to offer is via independent, professional advice.

“There are likely to be a considerable number of changes in mortgage pricing in the days to come and it’s important that consumers have access to the whole of market – by all means check online and consider what the existing lender has to offer, but at that point it would be prudent to use an adviser to ensure you get the best possible rate and the most suitable mortgage for your needs.”

Kensington Mortgages capital markets and digital director Alex Maddox says: “The market was predicting a 0.5 per cent rate cut with a 60 per cent probability so this is not a surprise. It is likely that this is just one of many actions that government and the Bank of England take to provide support to the economy. The budget later today may also contain some announcements. For customers with tracker mortgages this rate change will be welcome and reduce their monthly payments very quickly. Fixed rates will not drop as quickly though, as lender’s funding costs may still stay high even after this rate cut.”