Bank of England expected to cut interest rates

The Bank’s base interest rate heavily influences the rates High Street banks and other money lenders charge customers for loans, as well as credit cards.

Lenders have mostly “priced in” the impact of a base rate cut when making decisions on their own interest rates.

Mortgage rates are still much higher than they have been for much of the past decade. The average two-year fixed mortgage rate is 5.4%, according to financial information company Moneyfacts. A five-year deal has an average rate of 5.11%.

However, more than one million borrowers on tracker and variable deals could see an immediate fall in their monthly repayments if the Bank cuts rates.

Savers would likely see a reduction in the returns offered by banks and building societies. The current average rate for an easy access account is about 3% a year.

Rachel Springall, of Moneyfacts, said: “Savers are the ones who feel the force of cuts to interest rates. Those savers who use their interest to supplement their income will feel overlooked if rates plummet.”