The Bank of England has dramatically slashed the base rate by 1.5% to 3% - the lowest it has been since the early 1950s.
Analysts had been predicting a cut of between 0.5% and 1%, so the announcement will no doubt take many by surprise.
The dramatic reduction is an attempt by the Bank to reduce borrowing costs and ward off the looming recession.
The winners, the losers
The cut will be great news for homeowners with a tracker mortgage, or those whose mortgage is linked to their lender’s standard variable rate SVR.
Assuming you have a £150,000 mortgage that tracks the base rate, your monthly repayments will now fall by up to £133 – that’s an annual saving of almost £1,600.
However, the news will not be so welcome for savers – specifically those who have not locked into a notice or fixed rate savings account.
The good news is that savings rates will not fall immediately, so you will still have time to lock your money away in a fixed account provided you act fast.
