"Throughout the world, many central banks have faced considerable pressure to reduce interest rates, and the UK has been no exception. So, this news is extremely positive and remains consistent with what has been widely hoped for"
- Nathan Emerson - Propertymark
The Bank of England’s Monetary Policy Committee (MPC) has voted 5-4 to reduce the key interest rate by 0.25 percentage points to 4% at its meeting today. This marks the fifth rate cut within a year, bringing borrowing costs to their lowest level since March 2023
Despite inflation hovering at 3.6% in June, significantly above the 2% target, the MPC voted 5‑4 in favour of the cut, underscoring growing concerns over economic weakness, rising unemployment, and shrinking output in recent months.
Bank governor Andrew Bailey framed the decision as “finely balanced”, repeating the Bank’s commitment to a gradual and cautious easing of policy. The committee navigated internal divisions, with one member initially advocating for a larger drop to 3.75% before ultimately backing the 4% level.
The cut arrives as the UK economy grapples with slower activity following contractions in April and May. It aims to ease pressure on households and businesses, particularly benefiting mortgage holders across the country.
Looking ahead, the BoE reiterated its forward‑looking stance, emphasising that further adjustments will depend on how underlying disinflationary pressures evolve.
Industry reaction
Richard Donnell, Executive Director at Zoopla, comments, "While today's cut in the base rate is welcome news for businesses and consumers, it's unlikely to make a major difference to the cost of mortgages for home buyers or deliver a boost to house prices. 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.
"Lenders are offering very competitive mortgage deals so it's important home buyers talk to a mortgage broker to understand what they can afford and what this latest cut means for their home buying decisions."
Nathan Emerson, CEO of Propertymark, said, “Throughout the world, many central banks have faced considerable pressure to reduce interest rates, and the UK has been no exception. So, this news is extremely positive and remains consistent with what has been widely hoped for.
“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%.”
Ben Thompson, Deputy CEO, Mortgage Advice Bureau, said, “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.
“However, we recognise a major challenge: many potential borrowers simply aren't aware of the full spectrum of mortgage options available to them. Our research reveals that 27% of renters believe they'll never be able to afford their first home – a figure we’re determined to change.
“While we'll have to wait and see if another rate cut is on the horizon before the year ends, the message is clear: if homeownership felt out of reach to you before, today's climate offers a significantly stronger chance. 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.”
Simon Gammon, Managing Partner, Knight Frank Finance, said, "Today’s rate cut sends a clear signal that the Bank of England is now more focused on slowing growth and rising unemployment rather than the threat posed by inflation.
"The split vote – with members supporting everything from a hold to a 50 basis point cut – underlines how finely balanced the decision was. But the direction of travel is clear. Borrowers now believe mortgage rates are more likely to fall than rise, and that’s lifting sentiment across the market. If current trends persist, we could see sub-3.5% mortgage rates by Christmas."
Stephanie Daley, Director of Partnerships at mortgage advisor Alexander Hall, commented, "We’ve already seen significant strength return to the mortgage sector since interest rates began to stabilise and trend downwards. Today’s decision to further reduce the base rate will only serve to fuel this momentum, easing the cost of borrowing for the nation’s homebuyers even further.
"This welcome boost comes in addition to the recent decision to make the Mortgage Guarantee Scheme permanent, alongside the loosening of income lending restrictions, both of which have already had a positive impact on mortgage 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."
CEO of Foxtons, Guy Gittins, says, "Today’s decision to cut the base rate is a welcome development for the property market and one that should continue to support year-on-year growth, as we saw in the first half of 2025.
"This interest rate reduction, along with improving mortgage affordability and changing lending criteria from the new mortgage guarantee scheme, all provide further reassurance and stability for buyers and investors."
"As we move into the second half of the year, our outlook remains cautiously positive given the continued appetite for vendors to bring great property to the market, while taking into consideration wider macro-economic factors.”
Jonathan Samuels, CEO of Octane Capital, commented, "The Bank of England’s decision to cut the base rate today is a welcome move, offering a much-needed boost to the property market and building on the momentum seen over the last 12 months.
"While inflation remains a concern, we’ve already seen many lenders acting in anticipation of today’s cut, and the resulting reduction in borrowing costs will provide immediate relief, not just to the nation’s homebuyers, but also to those within the industry looking to utilise specialist lending products.
"A rate cut will further encourage developers to push forward with projects and bring much-needed housing stock to the market, and specialist lending plays a crucial role here, by offering flexible and accessible financing."
"As we move into the second half of the year, the combination of lower borrowing costs and the support from specialist lenders will be key in driving continued growth in the property sector."
Thomas Cantor, Co-Head of Short-Term Finance at West One Loans, commented, "While the Bank of England’s decision to cut the base rate today is a positive move for the property market, it’s important to note that this move has already been largely priced in by lenders.
"The expectation of a rate cut has been building for some time, however, it will continue to support market confidence and allow developers to move forward with critical housing projects.
"Specialist finance will continue to play a key role in ensuring projects are funded and completed, contributing to the ongoing stability and growth of the property sector."
