Falling inflation figures published this week could result in the Bank of England taking the decision to reduce the base rate of interest today, according to some commentators. Inflation of 3.2% represents a fall from since the summer of 2025, but remains some way above the Bank of England’s 2% target. However, the fact it is coming down has led to speculation the Monetary Policy Committee (MPC) could vote to reduce interest rates.
“Falling inflation confirms the Monetary Policy Committee must cut the base rate today,” said Nick Hale, CEO of Movera.
“The budget announcement last month did very little to encourage home buying and selling. The chancellor successfully made buy-to-let and higher value properties less attractive while offering nothing to first time buyers looking to get a foothold on the property ladder. And yet, home moves help to fuel the economy. Encouraging property transactions is a sure-fire way to stimulate growth.
“Given the chancellor missed a trick with the budget, the sector really needs to see the base rate cut. If lenders can slash interest rates further, we might just be able to stimulate some momentum in the market, without having to rely solely on the 1.8 million due to refinance next year. UK Finance may have predicted earlier this week that it will be down to the remortgage wave to carry the property market through 2026, but that doesn’t have to be the case.
“At Movera we’re also driving innovation in the property transaction process. If the sector can do what it can to make the home moving process as slick as possible, that would remove yet another barrier contributing to ongoing hesitation and trepidation from buyers.”
Nathan Emerson, CEO of Propertymark, said any decision to reduce the base rate would be welcome:
“With the cost of living remaining at the forefront of people’s minds throughout 2025, today’s news may provide people with a degree of confidence that inflation is gradually trending in the right direction.
“However, we still have some clear distance to go before inflation is back down at 2%, which, of course, is where the Bank of England has set its sights.
“In real terms, this metric remains extremely influential regarding base rate decisions for which we will see the Bank of England decide. Any combination of inflation dropping and potential base rate cuts would always be welcome news for those on the property ladder, and even more so for people considering making their first steps to purchase a home.”
Alongside the inflation figures, the Office for National Statistics has published the latest monthly House Price Index showing the rate of growth has slowed in recent months. Average UK house prices increased by 1.7%, to £270,000 in the 12 months to October 2025, down from a 2% annual growth rate in the 12 months to September 2025.
Average house prices increased to £292,000 (1.4%) in England, £211,000 (1.5%) in Wales, and £192,000 (3.3%) in Scotland, in the 12 months to October 2025.
For Richard Donnell, executive director of Zoopla, the slowing increase in house prices was reflective of the higher stamp duty costs for home buyers, and the impact of budget uncertainty on the market with annual price falls acute in London.
Concluding, Iain McKenzie, CEO of The Guild of Property Professionals, said
“(the latest figures) reflect a market with far more homes for sale than this time last year, giving buyers the best choice they’ve had in years and keeping price rises in check.
“It’s also important to remember that the past couple of months were shaped by uncertainty ahead of the autumn budget. Many buyers and sellers paused while waiting to see whether speculation around property reforms would materialise, which brought an earlier-than-usual seasonal slowdown. Even so, the market proved resilient: mortgage approvals held broadly steady in October and sales volumes actually rose month-on-month, underlining that committed, needs-based movers are still transacting.
“Looking ahead, higher supply may put some downward pressure on prices in the very short term, but the fundamentals remain supportive. The OBR is forecasting a modest recovery, with average price growth of around 2.5% a year through to 2030. All eyes are now on the interest rate decision. With inflation easing to 3.2%, a rate cut would be a welcome confidence boost and could help unlock stronger activity as we move into the spring 2026 selling season.”
