Comment on the Bank of England’s Decision to Lower Interest Rates
Following the Bank of England’s announcement that it is reducing interest rates by 25 basis points from 4.75% to 4.5% here are some thoughts from the industry.
Nathan Emerson, CEO of Propertymark:
“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.”
Daniel Austin, CEO and co-founder at ASK Partners:
“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.”
Neil Louth, Chief Executive Officer, the Acorn Group (part of LRG):
“Today’s reduction in interest rates is good news for the property industry and the millions of people wishing to move, remortgage or get onto the housing ladder.
Acorn Group, and LRG generally, saw positive trading throughout 2024, with sales figures strong and an increasing number of new applicants. Today’s decision is a strong indication that growth is here to stay.
It is reassuring to see the BoE’s positive response to both sluggish growth and the welcome news that inflation is easing – as exemplified in December’s Consumer Prices Index (CPI) figures. It also puts some flesh on the bones of Rachel Reeves’ recent commitment to growth in which we expect her to deliver on in the Spring budget on 26 March.
An interest rate cut has rarely been so widely anticipated: prior to today’s announcement, the mortgage lenders already priced in a rate cut, as interest-rate swaps data indicated a 92% probability of a reduction from 4.75% to 4.5%.
For our customers, the good news is increased affordability for buyers, and good refinancing prospects for homeowners and landlords. Sellers will see higher demand as borrowing becomes cheaper, and consequently this is likely to drive up property prices, especially if – as we are seeing at the moment – the supply of homes doesn’t keep pace.
So after excellent results in 2024, we look forward to an even better 2025 and the likelihood, in many cases, of many purchases completing before the Stamp Duty deadline of 1 April.”
Andy Jones, Group Director of Corporate Sales, Lettings & BTR at Leaders Romans Group (LRG):
“The property sector – spanning construction, estate agencies, buyers, and sellers – will likely see some positive effects from today’s announcement, though the extent of the impact will depend on broader economic conditions.
From an investment standpoint, a reduction in borrowing costs may encourage more activity, particularly among those already considering property investment. However, given the current market uncertainties, investors are likely to remain cautious. While lower rates can make borrowing more attractive, concerns around inflation, rental market stability, and future rate movements may temper any immediate surge in transactions.
Some investors may see this as an opportunity to expand portfolios or purchase higher-value properties, but the response will vary depending on location, property type, and long-term confidence in returns. We could also see renewed interest in commercial-to-residential conversions, as investors look for alternative opportunities in the market.
For existing property owners, demand could increase modestly, potentially pushing prices higher in certain segments. Some may choose to refinance at lower rates, freeing up capital for future investments. However, lenders remain cautious, and access to favourable financing terms will still depend on individual borrower profiles and market conditions.
While this rate cut is a step in the right direction, it follows a series of reductions that have yet to significantly revitalise the property market. If rates continue on this trajectory and economic confidence improves, we may see a more sustained rebound in activity heading into 2025. However, investors will be weighing this news against broader challenges, including regulatory changes, rental market pressures, and economic stability.”
Simon Gerrard, Managing Director at Martyn Gerrard Estate Agents:
“The market has been eagerly anticipating this cut to the base rate, and with inflation back under control, I think there is optimism that we could see the Bank of England continue to lower rates, which will lead to cheaper mortgages and boost the housing market. That said, any savings from the base rate being cut is likely to be offset by the ill-advised decision to end Stamp Duty relief in April, which will make all home purchases more expensive, especially for first-time buyers.
“It’s a highly positive sign for the market to see base rates coming down, though many mortgage lenders may have already anticipated this cut and adjusted their rates accordingly. Crucially, the direction of travel over the medium-term is one of rates continuing to fall – though we’re unlikely to return to the ultra-low interest rates of the pandemic era. Even if buyers don’t benefit that much from this particular cut, the momentum is firmly on their side and mortgage deals are only becoming more affordable.”
Sarah Thompson, Managing Director, Mortgage Scout:
“The Bank of England’s decision today to reduce the base rate is welcome news for homeowners and buyers alike. For many households, mortgage costs have been a growing and worrying burden, with the Bank’s own data from 2023 showing that mortgagors have had to cut back on discretionary spending to manage rising repayments since rate increases began in February 2022.
“This reduction could provide much-needed relief, particularly for those on variable-rate mortgages, with the potential for lower monthly payments easing financial pressures. First-time buyers who already face challenges in a competitive housing market may find improved affordability as lower interest rates make mortgage options more accessible.
“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.”
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