Impact on credit cards, savings and mortgages

The Bank of England cut interest rates on Thursday from 4.75% to 4.5%, the lowest level for more than 18 months.

Lower rates can reduce the cost of borrowing, but could also mean lower returns on savings.

The BBC spoke to borrowers and savers about how the rate cut will affect them.

Becky and Jon Ball, both 40, live in Selby, North Yorkshire with their daughters, 12-year-old Sophie and nine-year-old Emily, and their dog Bertie.

Becky works in finance and Jon is a truck driver.

They have lived in their house for 11 years, and their five-year fixed term mortgage ends in April.

They currently face paying an extra £125 per month, with the payment going up from £460 to £585.

Becky hopes the rate cut means “our rate that we’ve secured at the minute would go down so that we can jump on to a better rate before April”.

“We’ve already had discussions about what to cut back on to make sure we can meet the extra cost.”

But Jon says the drop in interest rates will also hit their savings. “It’s swings and roundabouts, you win with one, you lose with another. It’s a really difficult time for everybody.”

Craig Mountaine in Yorkshire has around £35,000 in savings in both savings accounts and premium bonds.

He says when rates were at their recent peak of 5.25% he was earning 4.75% on his savings, so around £180 a month.

He is now earning 4%, which he expects to drop to 3.75% once the latest cut is factored in, equating to around £140 a month.

“I’m probably looking at losing £40 a month from the peak [to today],” he says.

“As a semi-retired 55-year-old that extra income from savings interest allowed me and my wife to live rather than simply surviving.”

Gino Rocco, 59, and his partner Robert have a five-year fixed rate mortgage that is coming to an end in August.

They currently pay just over £2,000 a month on their newbuild flat in London Bridge. That could go up by £1,000 depending on the deal they manage to land.

He welcomes the cut in interest rates, and hopes they continue downwards in time for when his mortgage is up for renewal.

But he knows they will still face a significant increase.

“We will have to make changes. I’m aware that for others it’ll be much worse,” says Gino, who works as an in-house solicitor.

He adds that his service charge, heating and water bills have also gone up.

“It was comfortable but with everything else going up, it’s just about affordable now.

“It is not just people on low incomes who are struggling.”

Subbu, 48, lives in Dorset with his wife and children.

When the interest rate on his mortgage went up from 2.1% to 5%, his monthly repayments increased by £1,000.

His current mortgage is up for renewal in 2028, so he is now using a credit card to pay for the increased costs. The interest rate on his credit card is 23%.

A quarter percentage point cut in rates is not helpful enough, he says.

“It’s really tough at the moment, I find that any excess cash goes on our basic living needs and we really don’t have much leftover at the end of the month.”

Subbu is speaking to a broker to release some equity from the house to pay off his credit card. That might mean higher repayments on the mortgage, but he feels that this could be a better solution as it is paid off over a longer period of time compared to a credit card.

“It’s been very stressful, I don’t know how others manage. I hope that by the time we remortgage again, rates are a lot lower.”