In a widely expected decision, the Bank of England’s Monetary Policy Committee has cut interest rates to 4% – a move that property and finance experts agree will stimulate the housing market and provide a much-needed boost to those facing affordability challenges.
Jonathan Handford, managing director of Fine & Country, said cutting the base rate is the ‘shot in the arm’ the property sector has been waiting for:
“It’s not just the rate cuts themselves that help stimulate the market, but the economic tone they set. When reductions are seen as part of a stable recovery rather than a crisis response, they tend to stimulate real demand and drive up transactions.
“A softly-softly approach from the Bank of England could create the ideal conditions which translate as lower rates without runaway inflation, supporting a more balanced housing recovery across the regions.”
Rightmove’s mortgage expert Matt Smith said lenders will use the cut as the catalyst for further reductions – and expects at least one more cut this year:
“The market expects there will be one more Bank Rate cut before the end of the year, with an outside chance of two. Any further cuts would likely see this cycle repeat again – with lenders using it as an opportunity to reduce rates a little more. It bodes well for the second half of this year, with further mortgage rate reductions and stable prices likely to encourage more activity.”
Adrian Hall, the director of surveying at digital surveying platform HouzeCheck, wondered whether any further cuts may see the rate come down to 2%:
“This development is highly favourable. Falling mortgage rates benefit not only first-time buyers but also millions of households planning to remortgage in the coming years. The current question facing the Bank of England is the direction of future policy. Is this the final rate cut of 2025? Alternatively, could the Morgan Stanley team be correct in predicting that interest rates will decline to as low as 2.75% in the first half of the upcoming new year, ultimately reaching 2%?”
This may reassure Propertymark CEO Nathan Emerson, who pointed out that, while ‘extremely positive’, the cut is well below the optimal rate:
“While this news will be very welcome for many buyers and sellers who may be empowered to potentially borrow more to finance their next house move, inflation is still above the Bank of England’s target rate of 2%.”
Richard Donnell, executive director at Zoopla, said while the cut is unlikely to make a major difference to mortgage rates or house prices, it would instil confidence amongst buyers:
“The price of fixed rate mortgages already factors in the future path of base rates meaning average mortgage rates are likely to remain broadly where they are today. However, changes to the way banks assess mortgage affordability over recent months have already delivered a 20% boost to what people can borrow with no change in average mortgage rates. This has been supporting unseasonably strong levels of housing market activity, with the most homes for sale in over seven years. This cut to the base rate will support more positive housing market sentiment amongst home buyers.”
Iain McKenzie, CEO of The Guild of Property Professionals, agreed, calling the cut ‘a strong signal of intent’ that would ‘act as a catalyst for improving market sentiment’:
“Encouragingly, mortgage rates continue to trend downward supported by falling swap rates, which is helping to improve affordability and unlock demand, particularly among first-time buyers and those with larger deposits.
“We anticipate that this rate cut will continue to support buyer confidence and market momentum into the second half of the year. The alignment of slower house price growth, strong wage growth, and better mortgage availability is rebalancing affordability, especially in the more expensive southern regions, laying the groundwork for broader price stability.”
Stephanie Daley, director of partnerships at mortgage advisor Alexander Hall, said the rate cut would add a further boost to an already strong mortgage sector and have a positive impact on affordability:
“As we move into the second half of the year, this positive shift in the mortgage landscape is expected to support sustained demand and contribute to the long-term resilience of the market.”
Ben Thompson, deputy CEO of the Mortgage Advice Bureau, agreed, adding that the cut will bring the aspiration of home-ownership within reach for many would-be buyers:
“The Bank of England’s latest rate reduction will provide even more incentive for aspiring homeowners to step onto the property ladder. It was already a good time to buy, but this latest move makes it even more attractive. Lenders are continually adjusting their criteria, and it’s increasingly possible to borrow more than you could last year, opening up the mortgage market significantly.”
“With the expert guidance of a mortgage adviser, I strongly encourage aspiring buyers to take full advantage of the market and unlock the considerable financial benefits and long-term security that homeownership offers.”
LiveMore CEO Leon Diamond said the rate cut would be welcomed by older borrowers but more flexibility is needed to support later-life buyers:
“It’s important to remember that rate cuts alone won’t unlock financial resilience for the over-50s. We need a more flexible lending environment that recognises the diversity and complexity of later life finances. This includes smarter regulation, innovation in product design, and a shift in the industry mindset about what older borrowers can and should be able to do.”
Nick Hale, CEO of Movera, urged the property sector to streamline transactions to take full advantage of the cut:
“The Bank of England’s decision to cut interest rates for the third time this year by 25 basis points is a welcome boost for the mortgage market, with some lenders already reducing their rates ahead of time. Crucially, this continues to offer relief for borrowers and should lead to an increase in buyer momentum and demand for remortgages.
“With further interest rate cuts expected to follow – enabling transactions to increase further – it is crucial that the sector works quickly to streamline the homebuying and remortgaging process to ensure these transactions are dealt with quickly and efficiently.”
But Joe Pepper, UK chief executive officer at PEXA, said the lower rate is unlikely to make much difference to existing fixed-rate mortgage holders, and warned that improved buyer confidence will lead to a boost in demand that could prove costly for conveyancers:
“With additional measures being considered to boost affordability such as the LTI cap changes and stamp duty reform, as well as promises of more housing stock and increasing transaction data signalling already improved buyer confidence, conveyancers are bracing themselves for a surge in demand.
“Plain and simple, any surge like this could be the straw that breaks the camel’s back – the infrastructure behind the market is already teetering on the edge of collapse, and if we don’t improve the way in which we transact property urgently, we could end up looking back in a few months and wish we’d done more to save the camel.”
