"Lenders have been trimming mortgage rates for several weeks, but today’s decision adds momentum to what we expect to be a highly competitive January"
- Simon Gammon - Knight Frank
The Bank of England's Monetary Policy Committee has voted 5-4 to reduce Bank Rate from 4% to 3.75%, the first cut seen since August of this year.
This decision comes after inflation (CPI) dropped to 3.2% in November (from 3.6% in October), slowly edging towards the Bank’s 2.0% target.
Guy Gittins, CEO of Foxtons, commented, “Today’s base rate cut is a positive boost for the housing market and should help maintain the momentum we’ve seen building throughout 2025 as we head towards the new year.
"Lower borrowing costs will improve affordability for buyers, while giving additional confidence to sellers that demand will continue to strengthen following the removal of Autumn Budget uncertainty."
"With the end of the year fast approaching, we expect the market’s steady performance to continue as motivated buyers and sellers push to complete before the festive period.”
Jonathan Samuels, CEO of Octane Capital, said, “The Bank of England’s decision to cut the base rate is a welcome step and one that should help reinforce confidence across the wider economy.
"With inflation having stabilised in recent months, this move provides some much-needed relief for households and businesses alike, helping to ease pressure on borrowing costs and support spending and investment decisions."
"While the reduction itself is modest, it sends an important signal that monetary policy is beginning to shift in a more supportive direction and, for the property sector, this cut should help build on the stability we have seen throughout the year.”
Nathan Emerson, CEO of Propertymark, comments, “As we round the year off, it is extremely positive to see the Bank of England in a position where it has the confidence to make what is now a fourth base rate cut within twelve months.
“Although mortgage agreements vary, today’s news could typically represent a saving of around £150 each month for those currently on a tracker mortgage, or for those considering a new mortgage deal, when compared to the start of 2025."
“This, coupled with the fact that we have also witnessed the rate of inflation dip further only yesterday, should help create a strong platform for consumer confidence and affordability as we progress into the new year. In addition, there is real potential for lenders to support first-time buyers with more focused products to help uplift the market over the coming weeks and months.”
Simon Gammon, Managing Partner, Knight Frank Finance, said, "Lenders have been trimming mortgage rates for several weeks, but today’s decision adds momentum to what we expect to be a highly competitive January. With new lending targets in place, lenders are likely to undercut one another in a bid to win early-year business. It's not impossible that we see two-year fixed rates below 3% by spring.”
