Written by Tom Davies, Group Financial Services Managing Director at LRG (previously Leaders Romans Group)
Background to today’s decision
The Bank of England’s decision to hold the base rate at 4.25% comes as no surprise. After May’s cut from 4.5%, the likelihood of back-to-back reductions had already faded in the face of persistent inflation, higher labour costs and geopolitical uncertainty.
The broader economic context
But today’s decision is a sign of prudence rather than of pessimism. The economy started the year with some momentum, but underlying activity remains fragile. Businesses are still absorbing higher employment costs, and global challenges such tensions in the Middle East (potentially inflating oil prices) are feeding into a more cautious approach.
The impact on property sales
I do not expect the property market to be negatively impacted by today’s decision. Mortgage rates are in the 4% range, with ‘best buys’ starting with a 3, which, in historical terms, is healthy. Lending criteria is beginning to loosen on affordability and we are seeing increased appetite from lenders. Perhaps most importantly, stock levels are approximately 12% higher than this time last year, compared to buyer demand, up by 3%. This combination creates significant opportunity – for buyers and sellers.
While there’s always a temptation for buyers to wait for the next rate cut, in practice the impact of a lower mortgage rate could be offset by rising prices if stock tightens again. We’ve seen it many times before: confidence returns, stock shrinks and prices climb.
For prospective buyers, the key question shouldn’t be, “Will the rate fall again soon?” but, “Can I afford to buy now, and is the right property available?”. Today that answer is more often yes than no. Buyers who wait for the perfect moment may find it never arrives – or that it passes them by.
What matters now is a functioning, competitive mortgage market with realistic pricing and good choice. That’s a strong foundation: a good environment for anyone looking to move or invest.
We expect to see further rate cuts later in 2025, probably in August and again in November. But by then, some of today’s advantages may have shifted. So for buyers looking to secure a good mortgage and a wider choice of stock, this is an excellent time to go for it.
