"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"
- Richard Donnell - Zoopla
The Bank of England's Monetary Policy Committee has voted 5-4 to reduce Bank Rate to 4.25% in a boost for mortgage holders.
Today's decision, which was widely expected due to lower-than-expected inflation in March, marks the first reduction in Bank Rate since February.
Two members of the nine-person committee voted to reduce rates even further, taking them down to 4%. However, two others voted not to cut them at all, leaving them instead at 4.5%.
Bank of England governor Andrew Bailey said: "Inflationary pressures have continued to ease, so we've been able to cut rates again today. The past few weeks have shown how unpredictable the global economy can be.
"That’s why we need to stick to a gradual and careful approach to further rate cuts. Ensuring low and stable inflation is our top priority."
Industry reactions
Paresh Raja, CEO of Market Financial Solutions, commented: "The markets inked in this base rate cut several weeks ago, with many lenders having already dropped rates over the past fortnight. As a result, today's decision might be met with a somewhat muted response. But we should be careful not to take another 0.25% reduction for granted; rates are trending in the right direction and borrowers will welcome every cut.
"With more rate cuts expected in the months to come, some property buyers and investors might decide to bide their time. But there's an overwhelming sense that demand is returning to the market thanks to the increasingly favourable interest rate environment. Coupled with the usual seasonal trends we see, we're expecting the summer months to be a busy period, and the focus from lenders has to be on fast, decisive action - giving brokers and borrowers clarity on product availability and rates, along with prompt decisions on applications, will be crucial in allowing the market to flourish."
Nathan Emerson, CEO of Propertymark, comments: “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.”
Richard Donnell, Executive Director at Zoopla, comments: "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."
Matt Thompson, head of sales at Chestertons, says: “With interest rates now at 4.25%, more rate cuts on the horizon and a number of lenders offering sub-4% mortgages, the property market will undoubtedly see an increase in buyer activity. Particularly motivated will be first-time buyers who were unable to secure a property ahead of the changes to Stamp Duty thresholds and will see the lower interest rates as a window of opportunity to resume their search.
"House hunters who are in no rush, might wait until the Bank of England announces another rate cut but as buyer demand strongly outweighs the number of available properties, this strategy could see some buyers missing out.”
