The Bank of England has cut the base interest rate by 0.25% today as expected in a welcome shot in the arm to the property market.

Last time, the Bank held the rate at 4.5%, but has reduced it to 4.25% this month in what could be the first in a series of cuts this year.

With inflation still at 2.6%, above the Bank’s target of 2%, and the economy in need of some help to aid growth, the cut was widely anticipated.

Current swap rates, which the Bank’s Monetary Policy Committee (MPC) and Governor Andrew Bailey (main picture) factor into their thinking, also pointed to a base rate reduction.

It was a close vote at the latest MPC meeting with a narrow 5-4 majority in favour of a cut.

Industry reaction

Kevin Shaw, National Sales MD at LRG, says: “Today’s much-anticipated reduction in interest rates is a welcome shot in the arm for the housing market and well timed given the Stamp Duty changes at the end of March.

“At LRG we have seen a strong start to 2025 in all regions with sales up nearly 10%.  Factoring in a lower cost of borrowing will, we anticipate, give fresh momentum to the market as we move towards the summer months,” he says.

“The MPC, given the instability in the global economy, has appreciated the need to react quickly and there is now an expectation that interest rates will fall to around 3.5% by the end of this year which will further boost both confidence and sentiment.”

Tom Bill, head of UK Residential Research at Knight Frank, says: “Demand has increased as more mortgage rates drop below 4%, which will underpin prices while the momentum is maintained.

“Tariff turbulence has helped push interest rate expectations lower but buyers could be put off if it gets too bumpy,” he says.

“Inflation caused by new measures such as higher employer national insurance costs remains a risk, which means rates could start heading in the wrong direction again. For now, demand remains solid, especially in needs-driven markets.”

Dominic Agace, CEO at Winkworth, says: “We have seen lenders cut rates across the board in expectation of this move, with many rates back in the 3 per cent range.

“We expect this to support activity post the stamp duty rush for the year ahead. Despite further anticipated cuts, we expect the low 3 per cent range to be the longer term landing zone for mortgage rate,” he says.

“These new lower rates and recent major trade deals showing UK is regaining its international reputation, boosted by the expected announcement today on a deal reached on US and UK tariffs. We believe sentiment will remain positive in the property market.”

Nathan Emerson, CEO at Propertymark, says: “Today’s news will no doubt be extremely welcome for many, especially given current economic uncertainties. International bodies have recently stated they expect interest rates to fall in the UK as the year progresses.

“Overall, we hope to see interest rates further continue their downward trajectory over the course of 2025.

“The UK housing market has recently been buoyed by Stamp Duty threshold changes leading up to the start of April, and with the busier spring and summer months now here, this base rate reduction should attract even more buyers and sellers to the market and provide greater affordability,” he says.

“Housing is a central part of the UK economy, and we now hope to see considering the UK Government and the devolved administrations have shown a keen focus on housing growth, is that they look ahead to achieving their individual housebuilding targets to meet growing demand.”

Richard Donnell, Executive Director at Zoopla, says: “Today’s base rate cut is welcome news for people looking to sell and buy homes in 2025. It will provide a boost to market sentiment and filter slowly into lower mortgage rates as the cost of fixed-rate mortgages already reflects future cuts in the base rate.

“This, alongside reforms to mortgage regulations announced recently, will help boost buying power. This is important at a time when there is a large number of homes for sale across the UK – the average agent has 34 homes for sale,” he says.

“Improved buyer confidence will support sales and help more people realise their moving ambitions in the year ahead.”

Matt Thompson, Head of Sales at Chestertons, says: “With interest rates now at 4.25%, more rate cuts on the horizon and a number of lenders offering sub-4% mortgages, the property market will undoubtedly see an increase in buyer activity.

“Particularly motivated will be first-time buyers who were unable to secure a property ahead of the changes to Stamp Duty thresholds and will see the lower interest rates as a window of opportunity to resume their search,” he says.

“House hunters who are in no rush, might wait until the Bank of England announces another rate cut but as buyer demand strongly outweighs the number of available properties, this strategy could see some buyers missing out.”

Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, says: “Households hoping for a fourth bank rate cut had their wishes met today as the Bank of England reduced the benchmark interest rate to 4.25%, in line with expectations, taking the base rate to its lowest point since March 2023.

“The rate-setting Monetary Policy Committee’s split vote (5-4) in favour of a cut – the second this year – means some households will enjoy further respite from the punishing rise in borrowing costs seen between December 2021 and August 2023,” she says.

“Two members were even more dovish, voting for a 50-basis point cut to 4%, while two preferred to maintain the bank rate at 4.5%.”

Matt Smith, Rightmove’s Mortgage Expert, says: “The much-anticipated second rate cut of the year has arrived, and with some lenders having taken their time to pass on the benefits of the expected Bank Rate cut, I think we may now see further reductions in the coming days and weeks.

“A fresh round of mortgage rate reductions could be a boost for buyer demand as this year’s Spring Selling season approaches its end.

“The lowest available five-year and two-year fixed mortgage rates are edging downwards, with the cheapest available two-year fixed rate the lowest it’s been since before the mini-Budge,” he says.

Since the last rate cut, we’ve also seen how lenders are trying to help home-buyers outside of reducing rates, by reviewing their affordability criteria.

“Looking ahead, there’s still a lot of uncertainty over how trade tariffs may impact the global economy, so it’s difficult to make predictions right now.”

Jason Tebb, President at OnTheMarket, says: “With inflation falling in March, indicating that it is seemingly under control even if still above the 2 per cent target, the rate setters had no real reason to hold rates again.

“A reduction in interest rates sends an important message to buyers and sellers, enabling them to plan ahead with more confidence. It should ease affordability and boost the housing market, leading to an improvement in activity and transaction levels,” he says.

“With the stamp duty concession ending in March, expected further rate reductions should give the market welcome added momentum as the year progresses.”

Emily Williams, Director of Research at Savills, says: “Today’s anticipated rate cut by the Bank of England should give homebuyers confidence that mortgage affordability will continue to improve, despite the recent global trade uncertainties.

“Fragile buyer sentiment has caused housing market recovery to lose some traction in the last couple of months, despite a strong start to the year. The latest data from TwentyCi shows a -5.4% drop in net agreed sales year-on-year and a slight uptick in instructions ( 2.2%), which indicates a cooling in market activity now that the stamp duty deadline has passed, and within the context of sluggish economic growth,” she says.

“This uncertain backdrop continues to undermine buyer confidence, even with a competitive mortgage market and expectations of further base rate cuts.”

“It looks like we are in for at least another two rate cuts this year, which should gradually widen the pool of buyers and increase their buying power.”

Iain McKenzie, CEO at The Guild of Property Professionals, says: “Excellent news from the Bank of England. This decision to cut the base rate is a welcome boost for homebuyers and the wider property market.

“We’ve already seen mortgage rates easing, with sub-4% deals re-emerging, and this will only fuel that positive momentum, making homeownership more attainable,” he says.

“Despite global uncertainties, mover activity remains resilient, and with strong housing supply and sales agreed up year-on-year, the market is adapting well.

“This rate cut will further underpin confidence, supporting the forecast of a 5% uplift in sales volumes this year, particularly as we see the time to sell quickening. It’s a clear green light for those considering a move.”

Amy Reynolds, Head of Sales at Antony Roberts, says: “A rate cut helps the housing market hugely as it gives borrowers an affordability boost, filtering through to lower mortgage rates, which encourage activity.

“The Bank of England was widely expected to cut rates this month, and with borrowing costs remaining high compared to the pre-2022 norm, this is a welcome move,” she says.

“The stamp duty holiday has helped transaction levels with an increase in sales agreed in those chains where there is a first-time buyer keen to take advantage of the discount before the end of March.

“While this has been welcome, there have been concerns that once the stamp duty holiday ends, there will be a dip in activity and transactions, which is why the timing of this rate cut is so important.”

Tomer Aboody, Director at MT Finance, says: “With the rate cut today, plus potentially further reductions before the end of the year, this will help incentivise buyers and encourage sellers to be active.

“Affordability for buyers is one of, if not the most important, factor in making a decision to move, so with a lower base rate, which in turn should mean lower mortgage rates, buyers will look to take advantage and take the plunge.

“An active property market not only means more sales and an uptick in prices but also boosts the wider economy.”

Mark Harris, CEO at SPF Private Clients, says: “The Bank of England has reduced rates by a quarter point to 4.25 per cent, which comes as no real surprise with CPI inflation at 2.6 per cent in the year to March, down from 2.8 per cent in February.

“However, the Bank missed an opportunity to be bold and cut by a half point to 4 per cent. This would have sent out a strong message, helping boost the housing market and wider economy, particularly as the stamp duty concession has now ended.

“Swap rates continue on a downwards path with lenders reducing mortgage rates in recent weeks and a plethora of sub-4 per cent deals now available. This latest rate reduction was largely expected by the markets and has been factored into pricing already. However, a continual decline in Swaps would enable lenders to price more keenly in future, easing borrowers’ affordability concerns further,” he says.

Nick Leeming, Chairman of Jackson-Stops, says: “Today’s decision demonstrates the Bank of England’s commitment to steering the factors within its control to preserve market confidence.

“In an environment of persistent inflation and unpredictable global headwinds, maintaining stability is crucial. Continuing to cut the base rate will ease pressure on borrowers and encourage greater levels of lending, supporting the Government’s growth agenda,” he says.

“The cut will be welcome both for homeowners looking to move or first-time buyers agreeing a mortgage for the first time. After such a distorted spike in completion levels in March ahead of the impending Stamp Duty changes, a cut to the base rate should gradually translate into more favourable mortgage rates, improving affordability prospects for those that narrowly missed out.”

John Phillips, CEO at Just Mortgages and Spicerhaart, says: “Today’s decision was clearly not a surprise, with financial markets pricing in a cut with unanimous certainty. What will be interesting though is what happens next and whether today’s call is the opening of the flood gates for further and more frequent cuts – with some predicting three or even four more cuts in 2025.

“While there’s no question that President Trump’s trade war has forced the central bank to act with some urgency, so have fears around inflation and both business and consumer confidence – particularly in response to higher taxes and costs.

“Either way, movement on the base rate is absolutely welcomed and will certainly help to stimulate demand. Given the certainty around today’s news, we’ve already seen swaps respond positively and lenders re-price, with the competition for market share likely only to increase with future moves.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “With so much media speculation over the past few weeks, and the need to boost economic growth because of the talk surrounding tariffs, any cut to base rate today has already been largely factored in by homebuyers.

“Nevertheless the reduction will serve as a welcome shot in the arm to activity which has been flagging lately since the stamp duty concession was removed at the end of March.”