Base Rate Cuts: More Good News for Buyers and Sellers

Matt Thompson, head of sales at estate agency Chestertons, says: “As the economy has been showing signs of slowing and inflation remains elevated, it was widely expected for the Bank of England to cut interest rates today. Whilst the reduction might not meet the expectations of house hunters who have been hoping to see sub-4% rates this year, it will still encourage buyers to go ahead with their property purchase.

We have already seen a return in buyer confidence last month as the market witnessed an increasing number of properties being put up for sale which has given buyers a larger pool of homes to choose from. Lower interest rates, even if only reduced by 0.25 percentage points, will only boost buyer motivation over the coming months.”

Matt Thompson, Head of Sales at Chestertons

The move in the Bank of England base rate from 4.25% to 4% is in line with predictions for rate cuts during 2025. Expectations of lower rates throughout 2025/26 persist, with better deals emerging for new borrowers and those looking to remortgage. Regulatory changes in the industry are supporting a more positive market for buyers, but it is important to remember that mortgage rates are influenced by a variety of factors beyond the BoE base rate, so a drop in the bank rate does not necessarily result in an immediate reduction in mortgage rates across the board. 

When setting their rates, lenders take multiple elements into account, including their service levels, swap rates, the global economic picture and overall mortgage market conditions.

In a market where lower rates are anticipated borrowers, should compare rates, speak to a mortgage broker and be prepared to act. Homeowners can lock in to a new deal six to seven months in advance, giving them the opportunity to act fast on the best available rate.

Henry Knight, Managing Director of Springtide Capital