Mortgage holders and first-time buyers have long held out for a reprieve as the current interest rate cycle has caused mayhem in the property market over the past two years.
Savers, meanwhile, had hoped the Bank Rate reductions would come later rather than sooner.
Myron Jobson, senior personal finance analyst, interactive investor, says: “Those in the market for a mortgage will be jumping for joy as lower rates are likely to result in cheaper mortgage deals. Whether the cut to interest rates will result in huge drops in mortgage rates remains to be seen. However, even modest decreases could result in substantial savings for those seeking to remortgage and prospective homebuyers alike.
“The news is a welcome relief for the estimated 1.2 million people on tracker and standard variable rates, who will see an immediate reprieve in their payments.
“The reverse is true when it comes to savings rates. Britons have been earning more on their savings following the interest rate cycle, but the rate cut is likely to change the story. With further rate cuts in the not-too-distant future a distinct possibility, the simple message for savers is: act quickly to secure the best deals before they vanish.”
Here, Telegraph Money explains what the Bank Rate cut means for your mortgage, savings, pension and investments.
First-time buyers and homeowners remortgaging
While those already on a fixed-rate mortgage will be unaffected by a Bank Rate decision, the 1.5 million people needing to remortgage this year still have little chance of their mortgage costs going down, despite falling rates, because of how cheap home loans were two years ago.
Currently, the average two-year fixed rate is 5.77pc and the five-year fix is 5.38pc, according to the analyst Moneyfacts, though the best deals will be cheaper.
Rates have edged down in the past few weeks, and lenders have priced in a Bank Rate cut in the summer or autumn. Last month, Nationwide became the first high-street lender since April to offer a sub 4pc deal.
For the average UK homeowner without a fixed rate deal, a 0.25 percentage point reduction could result in lower a monthly mortgage payment of £32 (£384 per year), according to TotallyMoney.