UK Base Rate Cut to 4.5%: What It Means for the Property Market and Buyers

The Bank of England has made today its first Base Rate cut of 2025, reducing it by 0.25% to 4.5%.
While this was widely anticipated by financial markets, it raises key questions about how the UK property market and mortgage landscape will evolve. Will this modest reduction translate into better affordability for buyers? And what does it mean for property investors and home movers looking ahead?

A Turning Point for Mortgage Rates?

Mortgage rates have fluctuated in recent months, with some marginal increases despite lenders adjusting pricing. The latest figures show that the average two-year fixed mortgage rate has dipped slightly to 5%, while the average five-year fixed rate stands at 4.79%.

However, while the Base Rate cut might provide some relief, it is not an immediate trigger for dramatically lower mortgage rates. Lenders will remain cautious, factoring in global economic uncertainties, inflation trends, and further rate decisions by the Bank of England. The competitive nature of the mortgage market, however, suggests we could see gradual reductions in rates throughout the year.

A More Favourable Landscape for Home Buyers?

For buyers, affordability remains a key concern. A lower Base Rate could lead to an improvement in lender affordability assessments, as stress tests are often linked to Standard Variable Rates (SVRs), currently averaging 7.73%. If SVRs adjust downward, buyers may find it easier to qualify for a mortgage and secure better deals.

For those on fixed-rate mortgages, this change won’t impact their repayments until they remortgage. However, buyers considering a move now may benefit from locking in deals before the market adjusts further.

What This Means for the Property Market

Lower borrowing costs could inject renewed confidence into the property market, encouraging both home movers and investors. Since the start of the year, there have been signs of increased market activity, and this trend may strengthen as buyers and sellers adapt to a more stable interest rate environment.

However, it’s essential to remain realistic: while rates are declining, they are unlikely to return to the ultra-low levels seen in 2021. Property values, particularly in prime and super-prime markets, will continue to be influenced by broader economic factors and global investor sentiment.

What to Expect Next

The Bank of England’s Monetary Policy Committee meets every six weeks, with the next interest rate decision scheduled for 20 March 2025. The current market expectation is for two or possibly three more 0.25% cuts this year, potentially bringing the Base Rate down to 4% by the end of 2025. However, global economic shifts, inflation movements, and financial market reactions will continue to shape the path forward.

For those looking to buy or refinance, this is an opportune moment to explore mortgage options, speak to brokers, and keep a close eye on lender movements. The UK property market remains resilient, and strategic decision-making will be key in maximising opportunities in this evolving landscape.

Are you considering a move or looking to understand how the latest rate cut affects your property plans? Let’s discuss how to navigate the changing market with confidence.

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