The Bank of England has cut interest rates to 4%, taking the cost of borrowing to the lowest level for more than two years.

The cut, from the previous rate of 4.25%, is the fifth since August last year, but was only narrowly backed by the Bank’s policymakers who took two votes to reach a decision.

Lower rates will reduce monthly mortgage costs for some homeowners but it could also mean smaller returns for savers.

At 4%, interest rates are now at their lowest level since March 2023. This will boost some mortgage-holders and borrowers, but it is likely to mean smaller returns for savers.

People with tracker mortgages, which are loans that track the Bank’s base rate, should see an immediate reduction in monthly repayments. There about 600,000 people who have one.

The latest cut in rates means repayments on an average standard variable rate mortgage of £250,000 over 25 years will fall by £40 per month, according to financial information company Moneyfacts.