The Bank of England (BoE) has confirmed that interest rates will be cut to 4.5%, paving the way for cheaper borrowing.
The decision means rates are now at their lowest point since June 2023.
The cut from 4.75% to 4.5% indicates cheaper borrowing costs for things like loans and mortgages – but may also mean lower returns on savings.
However, inflation currently sits at 2.5% – above the Bank of England’s 2% target. It is predicted to climb after a rise in energy costs and higher employment costs linked to chancellor Rachel Reeves’s October budget.
The Bank also says it expects the UK economy to grow by 0.75% in 2025, a drop from its previous forecast of 1.5%.
How could this impact dentistry?
Iain Stevenson is head of dental at Wesleyan Financial Services. He offers insight into how the interest rate decision could impact dentists, particularly with regard to borrowing, mortgages and savings: ‘A rate cut, even a modest one, is a welcome development for many dentists who have been feeling the pressure of high borrowing costs.
‘This could provide some relief for those looking to finance major investments, such as new dental equipment or expanding their practices. Furthermore, prospective homebuyers in the dental profession might see more competitive mortgage deals becoming available, easing the financial burden of purchasing property.
‘However, it’s important to note that despite the cut, rates are expected to remain volatile throughout 2025, meaning that further rate fluctuations are likely. Dentists who are planning to enter or move up the property ladder should continue to monitor the market closely and work.
‘While a rate cut is a positive step, the uncertain economic environment calls for strategic planning to avoid being caught out by future shifts in borrowing costs.
‘Dentists with savings should view this rate cut, along with the potential for further cuts, as an opportunity to reassess where they hold their capital, considering both return and tax efficiency. While savings rates have been high, deposit accounts often provide limited protection from taxes on returns, making it an ideal time for dentists to evaluate the purpose and use of their capital.’
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