The Bank of England (BoE) has announced it has cut interest rates by a further 0.25%; from 4.5% to 4.25%; the fourth cut since last year’s 5.25% peak. The announcement was delayed to observe the two minute VE Day silence.
The move has been welcomed by professionals across financial services and property who hope the cut will continue to encourage activity in the property market.
Sharon Beedham, Relationship Director at ONP Solicitors said:
“Even a modest 0.25% cut can have a ripple effect, especially in a market as sentiment-driven as property. Buyers and homeowners alike have been looking for signs that affordability is improving — and a small base rate reduction, even if largely symbolic, could be just enough to restore some consumer confidence. For those conveyancers who saw intense activity leading up to March’s stamp duty deadline, this could be the catalyst that helps smooth what might otherwise have been a prolonged lull. We may not see an overnight spike in completions, but this kind of incremental shift could encourage more remortgaging activity and keep the sales pipeline ticking over. From a sector perspective, it’s about interpreting market signals and being ready to respond to renewed buyer intent, however subtle.”
Richard Donnell, Executive Director at Zoopla, said
“Today’s base rate cut is welcome news for people looking to sell and buy homes in 2025. It will provide a boost to market sentiment and filter slowly into lower mortgage rates as the cost of fixed-rate mortgages already reflects future cuts in the base rate. This, alongside reforms to mortgage regulations announced recently, will help boost buying power. This is important at a time when there is a large number of homes for sale across the UK – the average agent has 34 homes for sale. Improved buyer confidence will support sales and help more people realise their moving ambitions in the year ahead.”
Nathan Emerson, CEO of Propertymark, added:
“Today’s news will no doubt be extremely welcome for many, especially given current economic uncertainties. International bodies have recently stated they expect interest rates to fall in the UK as the year progresses. Overall, we hope to see interest rates further continue their downward trajectory over the course of 2025. The UK housing market has recently been buoyed by Stamp Duty threshold changes leading up to the start of April, and with the busier spring and summer months now here, this base rate reduction should attract even more buyers and sellers to the market and provide greater affordability.
“Housing is a central part of the UK economy, and we now hope to see considering the UK Government and the devolved administrations have shown a keen focus on housing growth, is that they look ahead to achieving their individual housebuilding targets to meet growing demand.”
For those refinancing the news is positive with a high street mortgage rate tussle currently ongoing.
“Today’s rate drop won’t come as much of a surprise, especially considering recent goings on across the pond. Despite inflation being likely to tick up again in the near term, the focus has now flipped to ensuring economic growth. Markets have been quick to price in future rate cuts, and consequently, it’s great to see so many mortgages now priced below 4%.”
said Ben Thompson, Deputy CEO, Mortgage Advice Bureau adding
“We now have real wage growth, lower mortgage rates, and a favourable rate outlook, plus a record high number of mortgage products overall. We’re even seeing some helpful lending for first time buyers, and hopefully that continues to grow, enabling more renters to become homeowners. Notwithstanding what has recently become ‘predictable unpredictability’ globally, it feels as though we have a small tailwind for the first time in a long time (at least domestically). It does now feel like a good time to buy, and a better time to refinance for those that need to.”
Joe Pepper, UK Chief Executive Office at PEXA, added
“1.8 million fixed-rate mortgages are set to expire this year, so the possibility of a cheaper remortgage will be music to borrowers’ ears. We will likely see an increase in demand for both remortgages and new transactions, especially as lenders have also been responding to moves by the regulator to loosen affordability criteria.”
going on to warn more transactions could create further pressure on busy conveyancers whose capacity is already stretched.
“As demand recovers for both remortgaging and homebuying, it is vital that we address the underlying strain on the hidden infrastructure behind the housing transaction to meet the Government’s lofty homeownership goals. The industry met the challenge that the Stamp Duty deadline rush brought, but the pressure on conveyancers’ capacity cannot be ignored. The Government’s intention to digitise parts of the homebuying process is a positive step, but we need to see more detail before we can judge whether or not it will be enough to support a vibrant housing market that an interest rate trending downwards will bring.”
And global uncertainty could yet play its part in the property market this year says Matt Smith at Rightmove
“The much-anticipated second rate cut of the year has arrived, and with some lenders having taken their time to pass on the benefits of the expected Bank Rate cut, I think we may now see further reductions in the coming days and weeks. A fresh round of mortgage rate reductions could be a boost for buyer demand as this year’s Spring Selling season approaches its end. The lowest available five-year and two-year fixed mortgage rates are edging downwards, with the cheapest available two-year fixed rate the lowest it’s been since before the mini-Budget. Since the last rate cut, we’ve also seen how lenders are trying to help home-buyers outside of reducing rates, by reviewing their affordability criteria.
“Looking ahead, there’s still a lot of uncertainty over how trade tariffs may impact the global economy, so it’s difficult to make predictions right now. However, as it stands, the financial markets are forecasting two-to-three more Bank Rate in 2025, which could take us to a rate of 3.75% by the end of the year. In the short-term, I think movers can expect average mortgage rates to trickle downwards over the next few weeks but not dramatically.”
In a further effort to support market activity, the Financial Conduct Authority (FCA) launched its consultation on relaxing lending rules yesterday (7th May) committing to support economic growth by reducing the regulatory burden on lenders and enabling simplification home lending, acknowledging there needed to be an ‘open…discussion on the balance between access to lending and levels of default’.
The FCA say the consultation, which is open until 4 June, will support greater choice and ease of access to options for customers, and guidance that is no longer required will be removed to ‘provide greater opportunity for innovation’.
