The Prime Minister, Gordon Brown, and the Chancellor, Alistair Darling, recently announced some welcoming news to the nation, stating that the base rate was going to be cut a day ahead of the Monetary Policy Committee meeting. The base rate was cut by 0.5%, which was the biggest cut for some time, and many consumers hoped that this meant that their borrowing costs would fall and leave them with more disposable income each month

The news of the rate cut was welcomed by industries and consumers around the country, and many were hopeful that they would be able to save money on their outgoings as a result of the base date cut. However, whilst it is natural to assume that a cut in the base rate means a cut in variable borrowing costs this is not always the case, and not all borrowers will benefit from the base rate cut

After the announcement of the rate cut around a quarter of mortgage lenders said that they would be passing on the rate cut to borrowers, which means that both existing and new borrowers with these lenders may be able to save money on their borrowing. However, the remainder have not yet passed on the rate cut or have already confirmed that they do not plan to do so, which leaves customers of these lenders out in the cold when it comes to saving money

When it comes to loans whether or not you get a reduced interest rate will depend on a number of factors, such as whether the lender is passing on the rate cut, whether you are a new customer applying for a loan, or whether you already have a loan that is variable rate. Those with fixed rate loans or mortgages will obviously not see any change in their interest rates because they are fixed

It is best to take matters into your own hands if you want to save money on your borrowing costs following the base rate cut. As an existing borrower you can shop around and look for more competitive rates on loans, mortgages, and credit cards, and as a new borrower you can compare different financial products from a range of lenders in order to find the most competitive deal and get the most affordable repayments.

Mortgage holders that find that their lender does not pass on the rate cut may find that they fare better by switching their mortgage and opting for another provider. Many people decide to remortgage after a rate cut if their own mortgage rate does not fall, but do bear in mind that the new lender may charge upfront fees and costs, and this may counteract the benefits of getting a lower rate of interest