Interest rates have been cut to a record low 0.25%, after the Monetary Policy Committee announced it was reducing its Bank Rate by 0.25 percentage points from its previous level of 0.5%.

This is the first interest rate change since Match 2009, bringing to an end the longest period of no change in rates since the War/post-War years of 1937-51.

The cut could be good news for many borrowers but a large number will not see any immediate change to their mortgage rate. According to the Council of Mortgage Lenders (CML), around half of borrowers are currently on fixed rates and will therefore see no immediate impact on their payments.

Of the remaining 4.9m homeowners with a variable-rate mortgage, over 1.5 million have a tracker rate mortgage. These borrowers may automatically see a rate reduction depending on their mortgage contract (but some will have a “collar” or lower floor below which rates cannot fall).

What about new borrowers?

For new borrowers, mortgage pricing is extremely competitive and set to remain so, according to the CML. However, the Bank of England has also been urging borrowers to plan ahead for the prospect of higher rates in the future. It is important not to assume that just because rates are low now, they will necessarily stay that way for a prolonged period.