Interest Rates: What Does a 0.25% Cut Mean for You in the North East?
Big news—the Bank of England just announced a 0.25% cut to the Base Rate, bringing it down to 4.5%. This is the first change of the year after the Bank kept rates steady in December. The goal? To keep inflation in check while balancing the overall economy. Inflation was recorded at 2.5% in December—still above the 2% target set by the government.
This cut wasn’t a huge surprise. Financial markets had been expecting a rate drop, as keeping rates too high for too long can slow down economic growth and put pressure on both businesses and households. So, what does this mean for your mortgage, savings, and bills? Let’s break it down.
What’s Happening with Mortgage Rates in the North East?
The North East property market has remained relatively stable compared to other regions, with house prices continuing to offer value for first-time buyers and home movers alike. Mortgage rates have been a bit of a mixed bag lately. Some lenders have dropped their rates, but overall, there have been small increases in certain areas. However, the good news is that just in the past week, the average rate for a 2-year fixed mortgage dropped slightly to 5%, and a 5-year fixed mortgage now sits at 4.79%.
If you’re currently on the lookout for a mortgage or thinking about re-mortgaging, it’s a great time to check out what rates are available. Shopping around can make a big difference in what you pay each month. If you’re based in the North East, where affordability is better than in many parts of the UK, now could be a great time to secure a mortgage before rates shift again.
What Does This Mean for Your Current Mortgage?
If you’re on a fixed-rate mortgage, nothing changes for now—your payments stay the same until your deal ends.
If you’re on a tracker or variable-rate mortgage, your monthly payments will likely go down as your interest rate adjusts to match the Base Rate.
If your fixed-rate deal is ending soon, now is the time to start looking at new options. Many lenders allow you to lock in a new rate six months before your current deal ends, giving you time to compare and avoid higher costs. If you do nothing, you could end up on your lender’s Standard Variable Rate (SVR), which is currently averaging 7.73%—a lot higher than most fixed deals!
With the North East being a prime location for affordability, borrowers in cities like Newcastle, Sunderland, and Durham have the chance to secure competitive rates compared to the national average.
How Does This Affect Affordability for Home Buyers in the North East?
When you apply for a mortgage, lenders run a ‘stress test’ to check if you could afford your repayments if rates were to jump significantly. These calculations are tied to SVRs, so if those start to drop, it could make mortgages more affordable for buyers and those looking to re-mortgage.
For first-time buyers in the North East, where house prices are significantly lower than in regions like London or the South East, a drop in mortgage rates could mean lower monthly payments, making it easier to get on the property ladder. Whether you're looking at homes in Gateshead, Middlesbrough, or Darlington, the lowered Base Rate could be a small but significant boost for affordability.
What’s Next for Interest Rates?
The Bank of England meets every six weeks to decide whether rates should go up, down, or stay the same. While this latest cut is a step in the right direction, don’t expect rates to plummet back to the historic lows we saw in 2021. Originally, the markets predicted four Base Rate cuts in 2025, but due to global economic shifts, that number has dropped to two or three. If these cuts happen, we could see the Base Rate settle around 4% by the end of the year.
The next Bank of England rate decision will be announced on March 20—we’ll be keeping an eye on what happens next!
Is Now the Right Time to Buy or Re-mortgage in the North East?
For those looking to buy a home in the North East, now could be a great time to take advantage of lower mortgage rates before potential shifts later in the year. Areas like Newcastle’s suburbs, Sunderland’s coastal communities, and Durham’s historic towns continue to offer great opportunities for buyers looking for affordability and long-term value.
If you're thinking about moving home or refinancing, now's a great time to start planning. Looking at your options early can help you lock in a better deal before rates change again. Use a mortgage calculator to see what you could afford, or speak with a lender to get a Mortgage in Principle and move one step closer to securing your dream home in the North East.
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