Breaking Property News 06/02/25
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Bank of England cuts base rate by 0.25%
Gareth Samples, CEO of The Property Franchise Group, comments: “Today’s decision to cut the rate will be welcomed news for both mortgaged homeowners, as well as mortgage-dependent buyers who are looking to get their foot on the ladder.
‘While inflation remains elevated above the target, the Bank of England is focused on the long term and stimulating economic growth. Economic growth is expected to be slightly stronger over 2025 than it was in 2024. An improved economic outlook, coupled with falling interest rates will help improve sentiment in the market and should stimulate activity to some degree.
“Further interest rate falls are expected in 2025, which should result in improved affordability, enticing a broader range of potential buyers. A greater range of active buyers should help drive the modest uplift in prices that is anticipated this year.”
Commenting on today’s BoE interest rate drop providing some relief for borrowers, Daniel Austin, CEO and co-founder at ASK Partners, said: “The Bank of England’s decision to lower interest rates to 4.5% marks a pivotal moment for the UK real estate market. While this move may provide some relief for borrowers, the broader impact will depend on how quickly lenders adjust mortgage rates and how sustained the rate-cutting cycle becomes.
For homeowners and prospective buyers, lower rates should, in theory, make mortgages more affordable. However, the current market dynamics, where fixed mortgage rates have remained elevated despite previous signs of easing, suggest that any immediate impact may be muted. That said, a more stable rate environment could help restore buyer confidence, particularly among those who had been waiting for clarity before entering the market.
“For investors and developers, the trajectory of rate cuts will be crucial. With inflation now closer to the Bank’s 2% target, there is renewed optimism that financing conditions will improve, unlocking capital for new developments. Demand remains strong, particularly in sectors like co-living and build-to-rent, where supply constraints continue to drive investor interest.
As we approach a potential shift in government policy and economic strategy, real estate stakeholders should remain agile. If rates continue to fall towards 3.5% by year-end, as some predict, this could fuel a more sustained recovery in transaction volumes and investment flows. However, uncertainty remains, and prudent financial planning will be key as the market navigates this transition.”
Iain McKenzie, CEO of The Guild of Property Professionals comments: “While inflation is still stubbornly sitting above the target, it was not enough to keep the Bank of England from cutting the rate. Today’s decision, as well as further rate cuts expected throughout 2025 should help to improve affordability, which in turn will attract a broader range of buyers to the market.
“Rates are forecast to drop to around 3.75% by the end of the year. Although much of this has already been priced into fixed mortgages, there could be some further downward shifts in these rates. This would be welcomed by those looking to move or those who will be remortgaging this year.
“While changes to Stamp Duty thresholds will have an impact on the market, it is expected that we will see a modest improvement for both the economy and the housing market in 2025. The economic backdrop has set the stage for steady market activity and moderate price growth throughout.”
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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