In a widely anticipated move, the Bank of England’s Monetary Policy Committee (MPC) has today lowered the UK’s key interest rate from 4.75% to 4.5%. This decision—welcomed by mortgage professionals and borrowers alike—comes amid growing concerns over the UK’s slowing economic growth.
Looking ahead, further quarter-point rate cuts are expected throughout 2025. However, today’s spotlight is on the Bank’s latest GDP forecast, which will play a crucial role in shaping market confidence.
We’ve gathered insights from mortgage and property experts on what this rate cut means for borrowers and investors in the coming months. Here’s what they had to say:
Anthony Harris, Independent Financial Adviser at national advice firm Continuum said: “As most lenders tend to look ahead to work out what rates they should set, I do not expect to see much in the way of major changes to fixed rate offers coming from mortgage lenders. The cut to the base rate has been strongly signposted in the run up to today’s announcement and has already fed through to mortgage rates. A number of lenders have in fact lowered their rates over the past week in advance of the announcement.
“However, with today’s commentary indicating that the Bank may make further small rate cuts over the coming months, lenders could make further changes to their fixed rate products as they are effectively forward pricing. Whilst we may see some more cuts as a result, rates are likely to remain fairly steady longer-term as the potential for any dramatic rate cuts remains low.”
Alpa Bhakta, CEO of Butterfield Mortgages Limited, said: “With Monetary Policy Committee decisions being the most significant driver of market sentiment, today’s rate cut should precede more activity as borrowing cost becomes lower. That said, challenges remain, and as lenders we must continue to provide flexible solutions and bespoke support to ensure brokers and property investors are well-positioned to thrive as the economic outlook improves.”
Paresh Raja, CEO of Market Financial Solutions, said: “Today’s decision was widely expected, and there’s been plenty of evidence of lenders changing their rates over recent weeks ahead of the base rate being cut. But it is another positive step nonetheless, and it will likely bring more buyers into the market.
“As ever, no sooner has the Bank of England delivered one decision than speculation begins about when it might cut the base rate again. The forecasts still suggest there could be anything between one and three further drops this year, but such predictions are sensitive to other trends, such as the performance of the economy and the rate of inflation. For now, the focus from lenders and brokers has to be on taking a pragmatic, responsive approach, ensuring they support borrowers as best they can, particularly if a wave of new prospective buyers and investors does enter the market.”
Sarah Thompson, Managing Director, Mortgage Scout, said: “The Bank of England’s decision today to reduce the base rate is welcome news for homeowners and buyers alike.
“Recent ONS figures show UK house prices rose by 3.3% over the past year, reflecting a resilient market despite economic headwinds. Inflation has fallen significantly from its October 2022 peak of 11.1%, but prices are still rising, albeit at a slower pace. The impact of recent fiscal policies, including changes to National Insurance Contributions, may also place upward pressure on costs as businesses adjust.
“Lenders like Barclays have already responded, cutting rates on selected mortgages and introducing new deals for energy-efficient homes. Falling SONIA swap rates, which influence fixed-rate mortgage pricing, suggest a broader trend towards improved lending conditions, with five-year swaps dropping from 4.12% to 3.92% in recent weeks.
“While this rate cut is a step in the right direction, affordability remains a key concern. The broader economic landscape is complex, and borrowers should seek expert advice to ensure they secure the best possible mortgage deal in these evolving conditions. This reduction offers tangible benefits, but careful planning remains essential to make the most of the opportunities it presents.”
Ross Turrell, Commercial Director of CHL Mortgages, said: “The past few years have proven beyond doubt that the base rate set on Threadneedle Street has the greatest influence on the property market, so today’s decision – though widely expected – will be celebrated by the UK property sector.
“We expect this rate cut to act as a catalyst for what is already shaping up to be a buoyant market in 2025. Buyer demand and transaction levels are rising, and any reductions to the cost of borrowing will certainly sustain this momentum. With further rate cuts anticipated this year, it feels as though we are returning to a more stable and, dare I say, ‘normal’ investment landscape.
“With upcoming stamp duty reforms also on the horizon, February and March are set to be particularly busy months as buyers move quickly to complete on purchases before April’s tax changes. It is therefore essential that lenders and brokers prepare for heightened market activity, ensuring their clients are in the best possible position to seize the opportunities this rate cut presents.”
Tim Parkes, CEO of RAW Capital Partners, said: “The market had already priced in a cut, so today’s decision almost felt like a foregone conclusion. As a result, lenders’ rates have fallen throughout January, and there has been a clear uptick in the number of investors and buyers coming to market – this momentum will be maintained by a more relaxed monetary environment.
“For international property investors, the direction of GBP should be of particular interest in the aftermath of the BoE meeting. Rate cuts typically lead to a decline in the value of the Pound, which could present opportunities for relative discounts on UK property for investors holding other currencies. This could lead to an uptick in enquiries from overseas in the coming months, particularly if further rate cuts are made on Threadneedle Street. “As the market continues to heat up post-cut, speed will be an essential quality for investors and brokers to seek out among lenders. Those that are able to provide decisions within days of an inquiry will rise to the fore and allow investors to take advantage of the opportunities that an improving investment landscape will provide.”
Darrell Walker, Director of Sales & Distribution at ModaMortgages, said: “Any decision to cut the base rate will stimulate the market, giving borrowers a shot in the arm. However, while today’s news was expected, the bigger question remains where the base rate will go in the next 12 months, and this, as ever, is far from certain.
“As a lender, we understand that rates will dominate conversations between buyers and brokers, but it is also vital that the service we provide is as painless as possible. Brokers want easy applications, swift decision-making and honest conversations; amidst rate fluctuations and base rate speculation, lenders cannot overlook the importance of delivering a great service, which will enable brokers and their clients to act with speed and confidence.”
Stephen Gomez, Mortgage Adviser at Wesleyan, said: “Today’s decision to cut rates – albeit marginally – was widely expected given the gradual fall in inflation.
“Understandably, people are still focused on trying to save as much money as they can. While some have pushed through with deals at current mortgage rates to try and take advantage of the stamp duty holiday, which is in place until the end of March, more have been sitting tight, waiting for rates to fall.
“While lower rates are in the pipeline, it’s likely that the Bank of England will maintain a cautious approach through 2025. This means we’re probably going to continue to see mortgage rates swinging up and down. This makes it even more important for people to seek expert help to find the right deal, at the right time, for them.”
Ben Allkins, head of mortgages and protection at Just Mortgages, said: “Given the recent positive news on inflation, this had to be the logical next step for the central bank. While a persistent threat, we cannot become too blinkered by managing inflation and allow the economy to stagnate. This positive step will hopefully be the adrenaline shot the economy needs and serve as the starting pistol for many borrowers to put their plans in action.
“Compared to the previous cut, we have to hope swap rates react positively too and move as we’d expect. With a little bit of breathing space and financial year-end approaching for many lenders, it may be enough for some to take another look at their pricing. Brokers hearing this today need to mobilise and get out among their clients and their community to share this good news. We’ve seen already this year that appetite is certainly there. We now need to demonstrate the opportunities that exist as they try to navigate the market.”
Holly Tomlinson, financial planner at Quilter: “Ahead of the Bank of England’s decision, lenders were already making changes. Lenders have proactively reduced rates on various mortgage products in anticipation of the Bank of England’s decision. Now that the rate cut is in place, homeowners on variable or tracker mortgages should start noticing lower monthly payments too. We may see some lenders introduce more competitive fixed-rate deals in the coming weeks but typically most new deals have already priced in today’s cut.”
Jerry Mulle, UK MD of Ohpen: “Today’s Bank of England base rate cut, to the lowest level in 18 months, should be welcome news for homeowners and prospective buyers. The move should signal easing inflation rates and in turn, lower mortgage rates. However, mortgage owners and applicants are not out of the woods.
“While interest rates have dropped, inflation is expected to rise again with changes in the upcoming Spring Budget in March, and uncertainty around how hard the UK economy could be hit by pending US tariffs from the new administration.
“Over the coming weeks and months home buyers may well feel increased stress during what is already a challenging mortgage application process. Our research into the current state of mortgage applications reveals that a third (32 %) of UK consumers found rising interest rates the most stressful part of the mortgage application process, rising to two fifths (41%) of Gen Y.
“In extraordinary times like these, the mortgage industry must make the mortgage application process more transparent and inclusive from the outset, to reduce stress in the process where possible. With a joined-up approach, the industry can simplify the application process by taking complex legacy technology out of the equation and enable better real-time data sharing between all the stakeholders involved in the home-buying journey.”
Alan Davison, Chief Commercial Officer of Afin Bank, commented: “Today’s 25bps cut to the Base Rate is no surprise, as lenders had already started pricing it into their fixed products. But I wonder if the Bank of England’s Monetary Policy Committee would have preferred another a week or so to ponder its decision given the impending risk of global economic turmoil sparked by Donald Trump’s threatened trade tariffs.
“For the time being, lower mortgage rates will be welcomed by borrowers looking to buy or remortgage soon, particularly those hoping to beat the lowering of the stamp duty threshold on 1st April.
“Whether there are more base rate drops in the pipeline and a steady fall in rates, as some commentators predicted at the end of last year, remains to be seen. Inflation is stubbornly high, which could be impacted further if a Trump trade war triggers worldwide price rises while also hindering our own export trade.
“I think for the market and policymakers, the next month is going to be a bit of a nail-biter.”
Thomas Cantor, Co-Head of Short-Term Finance at West One Loans, commented: “Whilst inflation has crept above the Bank of England’s target of two percent in recent months, the rate of inflation seen over the back end of last year has remained largely stable and significantly below the peak seen towards the end of 2022.
“So today’s base rate cut was largely expected and whilst it may only be a small step in the right direction, the hope is that this trend will continue over the course of the year, bringing some much needed impetus to the economy, helping to drive further positive sentiment in 2025.”
Stephanie Daley, Director of Partnerships at mortgage advisor Alexander Hall, commented: “The Bank of England’s decision to reduce interest rates to 4.5% will come as a welcome one to the nation’s homebuyers, bringing a much needed boost to property market sentiment, following the slight upward pressure on prices caused by increasing inflation levels in recent months.
“However, with the level of inflation remaining above the Bank of England’s two percent target, it’s likely that lenders will continue to act with vigilance and we can expect this ongoing uncertainty to be reflected in mortgage pricing.
“So whilst we are heading in the right direction and some lenders are reducing their rates, those planning their move should continue to seek the advice of an expert mortgage advisor to ensure that they are securing the very best rate available to them in the current market.
“One potentially positive outcome will be the reduction in certain lenders stress rates, which could give a bit more flexibility in affordability for customers and possibly give them more buying or remortgage options”
CEO of specialist lender Octane Capital, Jonathan Samuels, commented: “A reduction to the base rate is certainly positive news, however, it’s the swap rates market that dictates the level of mortgage affordability passed onto the nation’s home movers.
“The good news is that the mortgage sector has been responding well ahead of today’s decision and, not only have we seen swap rates start to reduce over the course of this month, but many lenders are already reducing their mortgage rates in response.”
Robert Sadler, Vice President of Real Estate at Excellion Capital: “This rate reduction takes us one step closer to where we need to be. But property investors will welcome this news with more than a little caution. While this decision may result in lower interest rates, it still doesn’t feel like we’re approaching the end of the UK’s economic uncertainty.
“Last autumn’s inflationary budget and Labour’s handling of the economy to date have created a lack of confidence among both investors and lenders. In fact, such is the negative sentiment right now that we are seeing lenders demonstrate an unwillingness to even consider incredible deals, particularly retail deals, where the assets are being bought at historically cheap prices with yield potential of 16%. This is despite experienced sponsors with solid business plans.
“If this negative sentiment has any chance of lifting, we’re going to need more proof from this government that they can manage the economy effectively and in favour of the investors who are, let’s be frank, at the centre of helping the economy grow.”
Co-founder and CEO of GetAgent.co.uk, Colby Short, commented: “The move to lower interest rates is no doubt the right one as inflation levels have remained broadly stable for some months now.
“We’ve already seen the mortgage industry react positively in anticipation of today’s news, as swap rates have fallen and many lenders have moved to lower the mortgage rates on offer.
“So whilst the property market may currently be benefiting from a minor surge in activity ahead of April’s stamp duty deadline, today’s decision should act as a further shot in the arm, although we expect the long-term picture to be one of more measured growth, with market momentum building gradually as the picture continues to improve.”
CEO of Yopa, Verona Frankish, commented: “Despite the fact that interest rates haven’t fallen at the speed we expected, we’ve seen a strong and consistent level of buyer activity sweep the property market over the last year and, with a further reduction today, we expect this to remain the case as we look to the year ahead.
“Of course, mortgage rates currently remain far higher than today’s home movers have become accustomed to in recent years and so a degree of caution is advisable. However, we’re already seeing lenders react positively by reducing rates and we expect the picture to continue to improve over the course of the year where mortgage affordability is concerned.”
Jonathan Handford, Managing Director at national estate agent group Fine & Country: “Today’s announcement marks a pivotal moment for the housing market and, more importantly, a significant step forward for first-time buyers on the path to homeownership.
“The first interest rate cut of 2025 paints an optimistic picture for the year ahead and should provide a much-needed confidence boost for prospective buyers. Lower rates are likely to push lenders to reduce mortgage costs, and have the potential to trigger a ‘rate war,’ with banks and lenders slashing rates to remain competitive.
“While the housing market experienced steady growth last year, affordability remains a hurdle for many. However, with interest rates continuing on a downward trajectory, previously hesitant buyers — especially first-time purchasers — may see this as the right moment to step onto the property ladder.
“In addition, the upcoming April deadline for changes to the stamp duty threshold — which will be lowered considerably — has also been propping up the market in recent months. Mortgage approvals in the UK rose unexpectedly in December, as buyers sought to beat the upcoming changes. This combination of lower interest rates and shifting tax policy may further accelerate decision-making among those looking to get their foot on the property ladder.
“Looking ahead, while CPI inflation slowed to 2.5% unexpectedly in December — nearer to the Government’s 2% target — the level of core inflation in the UK currently sits at 3.2%. Inflation will play a crucial role in determining the pace of future interest rate cuts. It also affects how much buyers are able to save for a deposit, so it’s crucial that we don’t see a surge.
“The Government and the Bank of England will need to strike a delicate balance — ensuring borrowing remains affordable while keeping inflationary pressures in check.
“The housing market’s trajectory in 2025 will be shaped by the interplay of lower interest rates, shifting fiscal policies, and broader economic conditions. If lenders aggressively lower mortgage rates, we could see heightened competition among buyers, driving short-term demand and pushing house prices up. Today’s rate cut could be the catalyst for a more dynamic and accessible market in the months ahead.”
Arjan Verbeek, CEO of Perenna said: “Bad economic news has become good news for borrowers. The known risk of a slowing UK economy has clearly trumped the unknown risk of rising global inflation on the back of a prospective trade war. Gloomier economic data closer to home, with UK economy failing to grow in the final months of 2024 and declining consumer confidence, clearly loomed larger for the MPC.
The news will be welcomed by those remortgaging, and those looking to get their foot on the ladder ahead of the Stamp Duty changes, supporting demand in the short term. But it won’t be a game changer for thousands of frustrated future homeowners who have to continue to postpone their dreams, even in cases where they have a sizable deposit, given the current rules the UK has around affordability. If the Government is determined to drive the growth that will benefit the next generation of homeowners, then we need to see regulations shift to support its aims. Turning words into action and reviewing the loan-to-income cap for lenders would be the right place to start.”
Phil Lawford, National Account Manager, Saffron for Intermediaries, comments: “A reduction in the Bank of England base rate is a positive and well-timed move, and is likely to spark activity in the property market. Confidence is key, both for buyers and housebuilders, who need assurance that demand will remain strong. Following a positive start to the year, this rate cut should help maintain momentum, giving developers – small and large – the confidence that their projects will sell.
“Despite this, affordability pressures will continue to weigh on buyers’ minds, reinforcing the need for broader solutions. While discussions around loosening LTI caps could provide some relief, the bigger issue remains supply.
“The Government’s grey belt policy was initially seen to unlock land for development, yet the House of Lords has now labelled it ‘largely redundant’ due to subsequent planning reforms. If housing delivery is to improve, a clearer and more effective approach to planning reform is required.”
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “It’s a rare good day for anyone on a tracker mortgage, who will see their monthly bills finally drop. If they opted for a tracker 18 months ago in the hope that rates were on their way down, the three-quarter point cuts we’ve had in that time won’t feel anything like rewarding enough. However, by this stage they’ll be prepared to take whatever they can get.
For those looking for a new fixed rate, it’s not going to move the dial significantly overnight, because the market had already largely priced this in. Right now, Moneyfacts data shows the average 2-year fixed rate mortgage has inched up from 5.48% at the start of the year to 5.52%. It may inch down again in the coming days, but it’s not going to bring a wave of relief for anyone set to remortgage in the coming weeks and months.
The latest HL Savings & Resilience Barometer shows that those who have had to remortgage since the end of 2022 pay an average of £158 a month more than those who haven’t yet had to press the button. The fact that rates aren’t coming down in a hurry means there’s more pain lying in wait for anyone looking for a new deal right now.”
Nick Hale, CEO of Movera, commented: “The Bank of England’s decision to lower the base rate marks a positive step for the mortgage and property markets, offering much-needed relief to borrowers after a prolonged period of high rates. While this cut could help boost confidence, the extent of its impact will depend on how quickly lenders pass on savings and whether further reductions follow in the coming months.
“For brokers and conveyancers, this shift may encourage more homebuyers and movers to re-enter the market, alongside continued demand in the remortgage sector. However, with affordability still a key concern, speed and efficiency in transactions will be crucial to helping borrowers secure the best available deals. The ONS inflation announcement later this month will provide further clarity on the long-term outlook, shaping expectations around future rate movements.
“We are focused on supporting the industry with digital solutions that make the homebuying and remortgaging process as smooth as possible. Whether rates fall further or stabilise, ensuring transactions are fast and efficient will be key to keeping the market moving.”
John Fraser-Tucker, Head of Mortgages at mortgage broker Mojo Mortgages explains: “The Bank of England’s base rate cut is good news for mortgage holders across the UK.
“This reduction means real, tangible benefits for homeowners. Variable-rate mortgage customers can expect to see their monthly payments drop. For example, for someone with a £200,000 mortgage over a 30-year period, this will be a predicted saving of £29 per month. Whilst this may not seem like a lot, it’s a saving of £10,440 over the full mortgage period.
“First-time buyers will also see some positives. Lower base rates are likely to result in slightly more attractive mortgage products, potentially improving affordability at a time when getting on the property ladder has been challenging.
“For those coming to the end of fixed-rate deals, now’s a good time to explore the market as lenders are likely to introduce more competitive rates.
“But let’s be clear – this isn’t a magic solution. Mortgage rates are still higher than the rock-bottom levels we saw a few years back, and the housing market remains complex.”
Andrew Gething, managing director of MorganAsh, said: “The consensus for a cut to start 2025 was already high, but last month’s surprise news on inflation only increased those chances. Even so, this decision is certainly welcome, particularly among those not on fixed rate mortgages and the many families that have continued to feel burdened by persistent financial pressures.
“Rather than a case of opening the flood gates for further movement, cuts like we’ve seen today are now likely to be far less frequent. As pressures on households and individuals remain, it’s an important reminder to firms to stay close to those clients who are at the biggest risk of facing difficulties. Just recently, we’ve seen the FCA remind mortgage intermediaries, as well as the wider financial services sector, of the importance of identifying and supporting vulnerable customers as it remains committed to embedding and enforcing Consumer Duty.
“Managing customer vulnerability is undoubtedly a clear weakness for many firms. The upcoming vulnerable customer review from the FCA is likely to reiterate this. No matter the path of interest rates or the frequency of cuts, firms absolutely need to know who their vulnerable customers are and what outcomes they are receiving. Tech adoption plays a critical role in making this a reality.”
Nathan Emerson, CEO of Propertymark, comments: “Despite widespread uncertainty and the Bank of England expecting inflation rates to increase to 2.8% by the third quarter of 2025 before easing again, today’s announcement comes as welcome news for many.
“It’s now likely that mortgage borrowing takes the same path and dips slightly which will, in turn, help ease the strain on people’s finances and improve their chances of homeownership. This extra boost in affordability and confidence is needed, and we look forward to hopefully seeing new and improved mortgage products enter the market over the coming weeks.”
Richard Pike, chief of sales and marketing at Phoebus Software, says: “The Bank of England is likely to be aiming for a normalised interest rate of around 3.5% moving forward to appease both borrowers and savers as ‘the new norm’. Today’s cut is a step towards that target rate and will be received well by borrowers on variable rate products. Whether swap rates particularly react to this cut in the longer term remains to be seen.
“What this rate cut will do is encourage economic growth and investment. You’d hope that as well as increasing mortgage originations volumes, this will start to show in major house building projects commencing with a view to creating the housing stock our industry and country needs. From an arrears perspective, following this morning’s good news on Q4 figures, lower rates will only assist lenders maintain portfolio performance.”
Kevin Roberts, Managing Director, Legal & General Mortgage Services comments: “Today’s base rate decision will be encouraging news for homebuyers, and some lenders have already priced this change into their mortgage rates over the past few days. Our broker data has shown a significant rise in first-time buyers searching for mortgages in the past year, and this latest rate reduction will give confidence to those looking to step onto the property ladder.
“To take advantage of these opportunities, it is important for buyers to speak with an adviser to get the best possible deal. This gives people the best chance of navigating changing rates and landing a product that fits their needs.”
