As the Bank of England lowers the base rate to 4%, financial professionals are watching closely for what this could mean for mortgage pricing and savings rates. With the vote passing by 5-4, this latest move could signal the start of a more sustained shift in the rate environment.
Now might be the time for borrowers to review their options and for savers to lock in value while they still can. We round up the key implications for the mortgage and property sector:
Kevin Roberts, Managing Director of L&G’s Mortgage Services business comments:
“The Bank of England’s decision to cut the base rate is a welcome boost for borrowers. The mortgage market is in good health – lenders are competing strongly and introducing innovative products following affordability rule changes to support first-time buyers, who now account for 60% of all mortgage broker searches with L&G. For those looking to buy, or remortgage, now is a great time to consult with an independent mortgage adviser to take advantage of the current market conditions.”
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.”
Nathan Emerson, CEO of Propertymark, comments:
“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%.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said: “It’s great to see the central bank putting the economy ahead of inflation when making today’s decision. While inflation has risen and is nearly double target, it importantly remains well within the bank’s broader forecast, which has long predicted a peak in Q3 before beginning to come back down. With a hold last month, the bank doesn’t have to stray too far from its gradual approach and critically gives the UK economy the adrenaline shot it so desperately needs.
There’s no doubt that many lenders will have already factored this into their pricing, but it remains a powerful piece of good news for brokers to be sharing with potential clients. Lenders have been staying competitive, all while continuing to innovate and seize opportunities to increase access and improve affordability. While we’ve certainly seen some bold rate predictions for the rest of the year and beyond – with some predictions of three more cuts – I’m hopeful this isn’t the last one we’ll see this year as inflation hopefully turns a corner and the central bank prioritises the health of the economy.”
Nick Hale, CEO of Movera, commented: “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. Our aim is to support the industry through this process, providing digital products and solutions that can make this a reality.”
Colin Bell, Founder and COO of Perenna said: “This cut means one thing for certain – the housing market will continue to heat up, fuelled by the narrative that rate cuts would solve all the affordability woes for those looking to get on the ladder. While it is indeed music to the ears of existing owners wanting to sell and upgrade their home, or older generations cashing out and downsizing for their retirements, for first time buyers, it’s more like a screeching violin solo they’re being told they should enjoy.
It is time to take off our rose-tinted glasses and be honest with our young people. The big blocker on housing affordability is the overall price, not the monthly payments. Many young people are already paying a small fortune in rent. We should stop acting like rate drops are a silver bullet solution to their housing woes. In fact, this rate cut will have done very little for first time buyers who simply can’t get over the house price hurdle, let alone secure a low-rate mortgage.”
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 expectations of house hunters who have been hoping to see sub-4% rates this year, it will encourage many to go ahead with their property purchase. We have already seen a return in buyer confidence last month as more properties were put up for sale which created a larger selection of homes to choose from. Lower interest rates, even if reduced by just 0.25 percentage points, will only boost buyer motivation over the coming months.”
Nick Jones, the mortgage sales and marketing director at Access FS, said: “Despite inflation data for June coming in at 3.6 per cent, markets were pricing in a 97 per cent chance of a rate cut today. So, this wasn’t exactly a surprise. What’s been cloudier for a while is where the Bank of England goes from here. Personally, I think it is now much more likely that best-buy rates could come close to 3 per cent next year. The lowest rates available at the moment – for people with big 40 per cent deposits or lots of equity in their homes – are just over 3.7 per cent. Given the base rate was 5.25 per cent in August 2023, that’s already looking pretty positive. But if the MPC continues to lower the base rate – especially if inflation weakens and the labour market softens further – mortgage rates could continue to drop into 2026.”
Ryan McGrath, Director of Second Charge Mortgages at Pepper Money, comments:
“Interest rates have fallen to their lowest level in over two years, providing immediate relief for customers on tracker products who will see reduced monthly payments. This improved rate environment makes second charge mortgages increasingly attractive, particularly for homeowners locked into favourable primary mortgage rates who need additional funding without disrupting their existing arrangements.
While today’s modest rate cut signals measured caution rather than a fundamental shift, it creates opportunities for those whose circumstances fall outside traditional lending criteria. With property transactions remaining subdued and economic pressures mounting, including falling payroll numbers and rising unemployment, secured loans offer a vital lifeline, allowing homeowners to unlock equity to for necessary home improvements.”
Adrian Hall, the director of surveying at HouzeCheck, a digital surveying platform, said:
“Despite persistent inflation, it was almost certain the interest rate would be cut – the only uncertainty was the magnitude of the reduction. Given the number of job vacancies continues to decrease and is now below pre-pandemic levels, and with unemployment rising to 4.7 per cent, the highest level since June 2021, it was widely anticipated the bank rate would decrease to at least four per cent. There is no longer concern regarding wage growth.
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 per cent in the first half of the upcoming new year, ultimately reaching 2 per cent?”
Richard Pike, chief marketing and sales officer at Phoebus, says: “Today’s decision by the Bank of England to cut the base rate is no surprise, given the growing economic pressures facing the UK. Although inflation remains stubbornly high, the MPC is clearly prioritising economic support in the face of slowing growth, rising unemployment and falling consumer confidence.
Rachel Reeves will, no doubt, have been praying for this cut as it will go some way to relieving the increased pressure she faces about potential tax rises looming at her autumn budget. And it will also provide some relief to mortgage holders, particularly those on variable rates or coming to the end of fixed-term deals as households face higher living costs and tax pressures.
For the housing market, this decision adds a layer of cautious optimism. While interest rate cuts don’t fix the structural issues around housing supply and affordability, lower borrowing costs do have the potential to unlock activity, especially among first-time buyers.
That said, persistent inflation, uncertainty over the government’s fiscal plans, and the global backdrop mean that lenders must remain agile. At Phoebus, we continue to support our clients with systems that help them adapt quickly to market and rate changes, enhance operational efficiency, and deliver for borrowers in a challenging and complex environment.”
Guy Anker, Money Expert at Compare the Market, said:
“Today’s decision by the Bank of England to cut interest rates could provide some welcome relief for many homeowners and prospective buyers. With mortgage rates having risen sharply over the past two years, today’s move could help ease some of the pressure on borrowers – especially those on variable-rate or tracker deals, and those coming to the end of a fixed term or tracker deal, who are looking into future repayment options.
However, lenders may pass on rate cuts at different speeds, and not all mortgage products will become cheaper overnight, making it crucial for consumers to compare deals carefully. Whether you’re remortgaging, buying your first home, or just looking to reduce monthly payments, shopping around online could help you find which competitive rates are available to you.”
Jo Carrasco, comments on the Bank of England’s rate decision this afternoon:
“Today’s rate cut sends a clear signal that the Monetary Policy Committee believes the greater risk now lies in a faltering economy rather than entrenched inflation.
While inflation remains nearly double the Bank of England’s target, the balance has shifted. Wage growth is easing, the labour market is softening, and GDP data shows the economy retracted in May. Meanwhile, the Bank appears increasingly confident that inflation will roll back next year, creating room to begin loosening policy.
Unless the economic outlook improves significantly, we expect at least one further cut before the end of the year, providing relief for borrowers on variable-rate mortgages.
It could also accelerate the downward trend in fixed mortgage pricing. Sub-4% deals are already widespread, supported by falling swap rates and intense competition among lenders.
Stonebridge’s latest Mortgage Market Briefing, which offers a snapshot of activity in the mortgage market, showed that the average borrower is already £890 better off than they were a year ago, thanks to falling rates. If today’s cut reduces funding costs further, borrowers should see further savings in the weeks ahead.
For advisers, staying close to their customers and proactively demonstrating the value of their professional advice must continue to be their priority.”
Peter Stimson, Director of Mortgages at the lender MPowered Mortgages, commented:
“Sometimes it’s not the cut that counts – but the voting. Today is one of those days where ‘god is in the detail’.
Even though the Bank of England Governor has been hinting for weeks that a base rate cut was all but certain, the voting pattern suggests far from uniform view among his fellow rate setters.
For four members of the Monetary Policy Committee, last month’s inflationary blowout was sufficiently bad for them to vote to hold rates firm in an effort to rein in the rapidly rising cost of living. At 3.6%, CPI isn’t far off double the Bank’s 2% target as so far, is still heading in the wrong direction!
Whilst the Committee’s doves have won the day with a view that the increasingly gloomy economic outlook, with slowing growth and employment warrant a cut, the narrowness of their victory will set many thinking that the next rate cut may be some time off.
The swaps market – which largely determines fixed mortgage rates – had priced in today’s cut and indeed future rate cuts, and may well see, based on the voting pattern and minutes, a continued cautious, slow and steady approach to rate reductions in the months ahead.
On this basis, borrowers are unlikely to see any material changes to their mortgage rates in the immediate term, simply as it is already priced into the swap curves. The only thing that is really going to drive any material change is a significant fall in CPI, allowing the hawks at the bank to agree that the beast of inflation has finally been tamed. For this, we eagerly await the inflation numbers in the weeks ahead!”
