Industry Reaction to Bank of England’s decision to hold interest rates at 4.25%
Following a previous cut in May, the rate has today been held at 4.25%.
This comes as a result of inflation easing slightly to 3.4% (May 2025), but remaining higher than the Bank of England target rate of 2.0%.
The decision to hold the base rate by the Monetary Policy Committee was the result of six out of the nine members voting in favour of a hold.
Matt Smith, Rightmove’s mortgages expert said:
“Home-movers will have to wait a little longer for a third Bank Rate cut of the year, but today’s hold was widely anticipated. Despite the global uncertainty and turbulent events that we’ve had so far this year, the mortgage market has remained fairly stable. We’re broadly where the markets expected us to be at the start of the year in terms of inflation and rate cuts.
“Lenders have a bit of room to reduce rates further even with a hold in the Bank Rate today so home-movers can still be hopeful of some small mortgage rate cuts over the next couple of weeks. Average rates have been pretty flat in recent weeks, but we have seen increasing signs of competition amongst lenders as they have reduced their stress-testing criteria and with new mortgage products coming back to market, lenders are looking at ways to support more people get the home that they want.”
Tom Davies, Group Financial Services Managing Director at LRG (previously Leaders Romans Group):
Background to today’s decision
The Bank of England’s decision to hold the base rate at 4.25% comes as no surprise. After May’s cut from 4.5%, the likelihood of back-to-back reductions had already faded in the face of persistent inflation, higher labour costs and geopolitical uncertainty.
The broader economic context
But today’s decision is a sign of prudence rather than of pessimism. The economy started the year with some momentum, but underlying activity remains fragile. Businesses are still absorbing higher employment costs, and global challenges such tensions in the Middle East (potentially inflating oil prices) are feeding into a more cautious approach.
The impact on property sales
I do not expect the property market to be negatively impacted by today’s decision. Mortgage rates are in the 4% range, with ‘best buys’ starting with a 3, which, in historical terms, is healthy. Lending criteria is beginning to loosen on affordability and we are seeing increased appetite from lenders. Perhaps most importantly, stock levels are approximately 12% higher than this time last year, compared to buyer demand, up by 3%. This combination creates significant opportunity – for buyers and sellers.
While there’s always a temptation for buyers to wait for the next rate cut, in practice the impact of a lower mortgage rate could be offset by rising prices if stock tightens again. We’ve seen it many times before: confidence returns, stock shrinks and prices climb.
For prospective buyers, the key question shouldn’t be, “Will the rate fall again soon?” but, “Can I afford to buy now, and is the right property available?”. Today that answer is more often yes than no. Buyers who wait for the perfect moment may find it never arrives – or that it passes them by.
What matters now is a functioning, competitive mortgage market with realistic pricing and good choice. That’s a strong foundation: a good environment for anyone looking to move or invest.
We expect to see further rate cuts later in 2025, probably in August and again in November. But by then, some of today’s advantages may have shifted. So for buyers looking to secure a good mortgage and a wider choice of stock, this is an excellent time to go for it.
Nathan Emerson, CEO of Propertymark, comments:
“There has been much talk of base rate cuts potentially happening across the summer months, and although today hasn’t delivered any dip, it remains positive to witness overall stability. This is especially prevalent when you consider the vast turbulence we have seen across the wider global economy.
“As we head further into the summer months and as the housing market hits its seasonal busy period, if conditions permit, it would be positive for consumers to have that much-anticipated catalyst of further cuts in base rate to help boost affordability and confidence.”
Stephanie Daley, Director of Partnerships at Alexander Hall, commented:
“Although a cut may have been the preferable decision, today’s choice to hold the base rate once again will still be welcomed by homebuyers and remortgagers alike, as it reinforces the growing sense of consistency and strength in the mortgage market.
We’ve continued to see growing borrower engagement in recent months, driven by greater pricing stability and increased lender confidence. Even without a rate cut we have seen product choice across all segments of the market remain healthy and the number of products available for low-deposit mortgages has improved substantially since the start of the year.
With this stable rate environment and improving affordability, we expect momentum to build further as we move into the second half of the year.”
Co-Head of Short-Term Finance at West One Loans, Guy Murray, commented:
“It’s disappointing not to see a base rate cut at this stage, particularly as the Bank of England now takes a break until September. The market needs stimulation — whether through monetary policy or direct government intervention — and continuing to delay that support risks stalling the progress we’ve seen in recent months.
For borrowers in the specialist finance space — especially developers and housebuilders managing larger, more complex funding needs — the lack of movement in rates keeps borrowing costs higher than they need to be at this point in the cycle. The market doesn’t just need stability, it needs momentum, and rate cuts are essential for driving that.
There’s now growing concern that we may only see one cut in 2025, which simply won’t go far enough to unlock the full potential of development activity. Developers are eager to get projects moving, but they need the right financial conditions to do so — and that means action, not caution.”
Jonathan Samuels, CEO of Octane Capital, commented:
“The Bank of England’s decision to hold interest rates today is a measured and expected response to the current economic climate and we’ve seen this tentative approach adopted many times before. While inflation has eased, it remains above target, and the Bank is clearly choosing to balance caution with progress.
Of course, this continued pause will still provide some much-needed reassurance for borrowers and lenders alike, maintaining the stability we’ve seen return to the mortgage sector in recent months.
Transaction levels are picking up, mortgage approvals are on the rise, and sentiment among both buyers and investors is improving.
We expect this momentum to build further through the second half of the year, laying the foundations for a more confident and active property market in 2025.”
Bradley Post, MD of RIFT, commented:
“The Bank of England’s decision to hold interest rates will come as a mixed bag for UK households. On the one hand, no news is good news and it’s certainly better than an increase. But for many families still grappling with elevated living costs, it doesn’t bring immediate relief.
Those with variable-rate mortgages or other forms of borrowing won’t see their monthly repayments increase, which is positive news. However, the cost of credit remains significantly higher than it was just a couple of years ago, and that continues to put pressure on household budgets. At the same time, savers are seeing better returns than in the past decade, but with inflation still eating into real-term gains, it’s a case of treading water rather than making meaningful progress.
“Ultimately, a rate hold maintains stability — but for households across the UK, the day-to-day financial squeeze is far from over. More targeted support and sustained economic growth will be key to improving financial resilience in the months ahead.”
Chief Sales Office for Foxtons, Jean Jameson, commented:
“Given the fact that inflation remains stubbornly higher than the Bank of England’s two percent target, a hold on the base rate was widely expected today and is unlikely to deter the nation’s homebuyers who have been entering the market in force since the start of the year.
Stability is key when it comes to market confidence and since interest rates have started trending downwards we’ve seen robust mortgage approval numbers. These are now converting to more offers made, more sales agreed and even greater positivity with respect to the upward rate of house price growth.
We’ve already seen many lenders re-introduce sub four percent product offerings as a result of increased competition and, with this level of market activity only expected to strengthen over the coming months, the nation’s buyers and remortgagers should continue to benefit from improved levels of affordability.”
Marc von Grundherr, Director of Benham and Reeves, commented:
“Today’s decision to hold the base rate is a pragmatic one, and while it may not move the dial dramatically, it reinforces the growing sense of stability returning to the property market. In London, where the cost of homeownership is considerably higher, even small fluctuations in borrowing costs can have a significant impact on buyer sentiment and affordability.
A hold on rates provides much-needed breathing room for those navigating the capital’s challenging market, particularly first-time buyers and upsizers who are already stretching their finances. We’ve seen renewed confidence over recent months, with buyers beginning to return and sellers adjusting expectations — today’s decision will help to maintain that momentum.
While we’re not expecting a surge overnight, the foundations are being laid for a more active and balanced London market as we move through the remainder of the year. Stability breeds confidence, and that’s exactly what the market needs right now.”
Daniel Austin, CEO and co-founder at ASK Partners, said:
“Today’s decision to hold interest rates, following unchanged inflation data, offers some reassurance after recent market volatility. However, with global uncertainty, driven by trade tensions and domestic tax shifts, still casting a shadow, the question now is how long the Bank of England can maintain this pause.
“For homeowners and buyers, the hope of lower borrowing costs remains alive. But persistently high fixed mortgage rates continue to delay meaningful relief. While house prices have largely flatlined since the end of the stamp duty holiday, any Trump-related volatility that pushes down swap rates could improve affordability and rekindle momentum.
“Investors and developers are watching closely. Demand remains strong in resilient sectors like co-living and build-to-rent, where supply-demand imbalances keep capital flowing. A clear, downward path for rates would help unlock further activity – but with uncertainty still high, staying agile is essential.”
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