Bank of England interest rates decision – Thoughts from the Industry
The Bank of England has just announced its decision to cut the base rate 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.
The Monetary Policy Committee voted 5-4 in favour of cutting the rate to 3.75.
Here are some thoughts from the Industry.
Matt Smith, Rightmove’s mortgages expert says:
“The financial markets and mortgage lenders have been expecting today’s Bank Rate cut for a while, and therefore responded early with mortgage rate cuts in December to round off the year. Bank Rate cut headlines are always positive for home-mover sentiment, even if this one has already been baked into mortgage rate cuts and won’t drive further drops. However, what will have more of an impact on the future direction of mortgage rates is the better than expected inflation figure reported earlier this week, which has improved the market’s forecast for next year. Don’t expect any big rate drops before Christmas while the property market is quieter, but it does mean we could now see a fresh round of rate cuts in the new year as lenders look to start the new year with a bang. Home-movers are likely to see the most notable rate drops for two-year fixed products rather than five, and next year we expect the gap between two-year and five-year deals to grow.”
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.”
Daniel Austin, CEO and co-founder at ASK Partners, said:
“Today’s modest rate cut is a welcome sign that the effort to bring inflation under control is progressing. It will not transform conditions overnight, but the early response from the market has been encouraging. Even in anticipation of a cut, mortgage rates fell to their lowest levels since before the mini–budget, signalling that lenders are actively competing for customers.
“The housing market will welcome any relief for homeowners and buyers, although the impact will take time to filter through. Confidence among households remains fragile and, without clearer fiscal direction, many will continue to take a cautious view of their finances.
“Following a bruising Autumn Statement, we hope this marks the beginning of a more supportive environment for buyers. Developers and purchasers are still contending with high build costs, tight margins and a planning system that slows delivery. Proposed changes to affordable housing requirements and planning processes may help scheme viability, but financing costs remain the biggest constraint. What is needed now is a combination of a sustained positive rate outlook, pragmatic planning reform and targeted support for first-time buyers.
“Segments with strong structural drivers continue to attract capital, particularly build-to-rent, co-living, storage, logistics and data centres, where supply remains tight and income resilient. The UK’s relative economic resilience, alongside renewed interest from Gulf and Southeast Asian investors, is also helping to support sentiment. A clearer downward path for inflation and a move toward a lower Bank Rate could unlock stalled projects in 2026. Until then, real estate debt and income-led strategies offer investors an attractive way to remain active while managing downside risk.”
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.”
Richard Merrett, Managing Director of Alexander Hall, commented:
“We’ve seen inflation heading in the right direction in recent months, and today’s decision to cut interest rates to 3.75% reflects this growing confidence, with the base rate falling below 4% for the first time since February 2023.
This will help to further boost a mortgage sector that has already seen marked improvements over the last year, irrespective of the headline rate, with lenders broadening criteria, widening affordability options, and supporting higher LTV borrowing.
Today’s cut will only strengthen this trend, providing buyers with an additional boost at a time when confidence is already returning and the direction of travel remains positive as we head towards the new year.”
Jonathan Samuels, CEO of Octane Capital, commented:
“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.”
Sarah Thompson, Group Financial Services Director, Mortgage Scout, Part of LRG:
“The Bank of England has now confirmed what the mortgage market has been moving towards for months: a reduction in the base rate, and a return to more stable ground. This time last year, interest rates were starting to come down from their historical highs. Which meant mortgage affordability was under immense pressure, and buyer confidence had taken a hit. Throughout 2025, we’ve seen a steady improvement in financial conditions. Swap rates have eased, lenders have re-entered the market with sharper pricing, and affordability criteria have been relaxed. Today’s decision reinforces that momentum.
“It won’t bring rates back to where they were before rates began rising, but it does mark a clear shift in tone. And that matters, particularly for the thousands of borrowers whose ultra-low fixed rates expire in 2026. While their repayments will still increase, today’s cut softens the landing.
“Just as importantly, it sends a signal to buyers who have been holding back – the market is stabilising. Combined with greater product choice and rising lender competition, this should give people more confidence to move, refinance, or step onto the ladder, helping unlock demand and support a healthier, more active sales market in 2026.”
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