The Bank of England (BoE) has voted to lower the base rate by 0.25% to 4.50%.
This follows the Monetary Policy Committee’s (MPC) decision to hold the base rate in December, after the initial move in November to reduce the rate to 4.75%.
This marked the first time it had fallen below 5.00% since rates were raised above that level in June 2023.
The latest cut is aimed at supporting economic growth as inflation continues to slowly decline, recently dropping to 2.5% from a peak of 11.1% in October 2022.
Reaction:
Nicholas Mendes, mortgage technical manager and head of marketing at John Charcol:
“The Bank of England’s decision to cut the base rate by 0.25% to 4.5% reflects growing concerns over the UK’s sluggish economic growth.
“With GDP flatlining for the past six months, demand remains weak, and lowering borrowing costs should help to boost investment, consumer spending, and business confidence.
“While headline inflation has unexpectedly fallen to 2.5% in December, wage growth remains stubbornly high at 5.6%, and weak productivity raises the risk that inflationary pressures could re-emerge if demand picks up too quickly.
“This move also comes at a time of uncertainty in global trade, particularly with Donald Trump’s trade policies threatening fresh tariffs and potential supply chain disruptions.
“While the UK may not face direct levies, a weaker pound could push up the cost of imports, adding to inflationary pressures.
“Markets have already responded, with UK Government bond yields falling, reflecting expectations that further rate cuts may follow if economic growth continues to falter.
“This decision marks a shift in the Bank of England’s priorities, placing more emphasis on supporting the economy rather than solely focusing on inflation.
“The challenge now is to strike the right balance providing the necessary stimulus without allowing inflation to creep back up, particularly as global economic uncertainty remains high.
“The Bank’s next moves will depend on how wage growth, productivity, and broader economic conditions evolve in the coming months.”
Adrian MacDiarmid, head of mortgage lender relations at Barratt Redrow:
“We expect that this latest cut- which follows the reductions we saw last summer- will prompt some lenders to lower mortgage rates.
“This is great news for both existing homeowners and buyers, offering a welcome sense of stability in what has been an unpredictable market.
“One other thing for buyers to be aware of is the change in Stamp Duty thresholds, which will come into effect from 1st April.
“These could make a significant difference to affordability for first-time buyers through to next-steppers and downsizers and we would encourage anyone looking to purchase a property to act fast to beat the Stamp Duty rise.
“As well as taking into account today’s interest rate cut when considering affordability, buyers can scan the market to look at the many competitive offers on the table from new build developers.
“For example, Barratt Homes and David Wilson Homes are part of a scheme called Own New Rate Reducer, which enables buyers to reduce the rate they pay rates from as low as 1.66%, significantly reducing their monthly payments in the early years of the mortgage.”
Terry Higgins, mortgage expert and group MD of TNHG New Build Mortgages:
“A lower Bank of England base rate generally means cheaper borrowing costs.
“For UK homeowners who are on a variable or tracker-rate mortgage, these cuts could lead to lower monthly repayments.
“This could also benefit anyone purchasing a property if lenders pass on the reduction, helping to make the property ladder more accessible for future homeowners.
“Buyers could potentially borrow more due to improved affordability.
“For those due to remortgage, it’s a good idea to closely track upcoming rate forecasts as these could be cut further down throughout the year.
“By switching to a mortgage with a lower interest rate, homeowners can reduce their monthly payments further or shorten the term of their loan, potentially saving thousands over the long run.”
Justus Brown, CEO of Acre:
“With many signals flashing that the UK economy has already slowed, and tax increases for employers coming in in April, bond rates seem to have peaked and the Bank of England has now cut rates.
“Even after the Stamp Duty Holiday ending in March (which is more of a benefit for anyone outside of London), the lowered long term interest rates mean we can expect to continue to see strong mortgage demand as those looking to lock in better rates as their existing deals come to an end.
“Remortgage business is set to grow by 30% and hit £76bn this year, according to UK Finance, while the product transfer market is also on track to grow, albeit at a smaller 13%, to reach £254bn.
“For mortgage brokers, who may have found that January was a record-breaking month (it was for Acre) there’s no signs of workload relief.
“Demands is likely to remain high past March.”
Alpa Bhakta, CEO of Butterfield Mortgages Limited:
“With Monetary Policy Committee decisions being the most significant driver of market sentiment, today’s rate cut should precede more activity as borrowing cost becomes lower.
“That said, challenges remain, and as lenders we must continue to provide flexible solutions and bespoke support to ensure brokers and property investors are well-positioned to thrive as the economic outlook improves.”
Paresh Raja, CEO of Market Financial Solutions:
“Today’s decision was widely expected, and there’s been plenty of evidence of lenders changing their rates over recent weeks ahead of the base rate being cut.
“But it is another positive step nonetheless, and it will likely bring more buyers into the market.
“As ever, no sooner has the Bank of England delivered one decision than speculation begins about when it might cut the base rate again.
“The forecasts still suggest there could be anything between one and three further drops this year, but such predictions are sensitive to other trends, such as the performance of the economy and the rate of inflation.
“For now, the focus from lenders and brokers has to be on taking a pragmatic, responsive approach, ensuring they support borrowers as best they can, particularly if a wave of new prospective buyers and investors does enter the market.”
Russell Gous, editor-in-chief of TopMoneyCompare:
“The Bank’s decision to reduce the base rate to 4.5% came as no surprise, but it does reflect ongoing concerns about the UK’s economic slowdown.
“Looking ahead, external factors such as global trade tensions could play a key role in shaping the Bank’s future decisions.
“The potential for US tariffs to disrupt global trade flows and dampen UK economic growth may push the BoE towards faster and deeper cuts.
“However, if tariffs also drive inflation higher through increased import costs, policymakers may be forced to take a more cautious approach.
“The consensus seems to still be on at least another two cuts by the end of the year, but as we saw in 2024, these forecasts quickly change.
“Lower rates typically weaken the pound, so markets will be watching closely for signals on future cuts and how the UK economy responds.
“If expectations shift towards a more aggressive easing cycle, sterling could face further pressure”
George Holmes, managing director of Aurora Capital:
“Today’s decision to lower the base rate to 4.5% should bring some welcome relief to businesses grappling with high borrowing costs.
“While this cut is another step in the right direction, small businesses are still facing a challenging financial landscape, with rising wage bills, persistent cost pressures, and ongoing uncertainty around economic growth.
“With inflation still above target and business expenses remaining high—particularly after the recent rise in the National Minimum Wage and employer National Insurance contributions—many SMEs won’t feel the benefits immediately.
“Business owners should continue to assess their financial position carefully, exploring refinancing options and seeking expert guidance to ensure they capitalise on any savings while managing ongoing cost pressures.
“The big question for businesses looking for finance is how quickly lenders will pass these savings on.
“With the next rate decision uncertain, SMEs should remain proactive, making informed funding decisions to sustain growth and resilience in the months ahead.”
Nick Leeming, chairman of Jackson-Stops:
“While the Bank of England’s decision may not have been a surprise, it will certainly be welcomed.
“With expectations that there will be a series of incremental cuts to the base rate this year, this is a vote of confidence from the Bank of England in the markets more widely.
“While some economic volatility continues to weigh on the minds of decision makers, the Government’s staunch commitment to boosting growth alongside the ECB recently cutting rates – and the Fed expected to do the same – made the Bank of England’s decision a necessity.
“For buyers and borrowers, any cut to the base rate is a positive step, however the trickle down to mortgage rates may not be so immediate.
“There remains lots for prospective buyers to be positive about. Inflation is much lower than a year ago and the tide has now turned on interest rates, which will ease affordability in the mid- to long-term.
“We are still seeing a strong level of commitment to the market and sales progressing at the end of last year with confident pricing.
“We expect activity levels to persist with Stamp Duty changes in March motivating quick completions.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“The bank rate cut has been widely expected though its impact on the housing market is unlikely to be significant, at least immediately.
“However, confidence is vital to improving activity, not just when it comes to buying and selling houses but the wider economy, and even a small reduction is welcome.
“The housing market certainly needs a shot in the arm as many have been taking too long over decisions, although demand has certainly picked up since the stat of the year.
“On the plus side, in our offices we haven’t seen transactions failing or heavy renegotiations, with most sales proceeding – albeit sometimes painfully slowly.”
Neal Moy, managing director of Paragon Development Finance:
“It’s a welcome move by the Bank of England to reduce the base rate today, especially with the lack of growth we’re currently seeing in the UK economy.
“Whilst the reduction in base rate may not have immediate consequences for the wider economy, the decrease in interest rates could mean that borrowing may become cheaper.
“This will be positive for those looking to purchase a property, but also importantly, cheaper borrowing will be a big positive for SME housebuilders who are helping to deliver the ambitious housing targets over the next five years and need financing to do so.”
Rob Clifford, chief executive of Stonebridge:
“The Monetary Policy Committee’s move today signals it felt the need to intervene to boost the economy.
“With business confidence wavering, growth stalling, and a potential US trade war looming, the decision was clearly taken to prioritise growth over taming inflation at present.
“Here’s hoping today’s cut will jumpstart spending, encourage investment, and keep the momentum building for what is tipped to be a positive year for the UK’s housing market.
“The key question is: where do rates go from here? Markets are betting on three more cuts this year, though that is far from guaranteed.
“If inflation proves stubborn, we might see fewer cuts; yet if the economy continues to hibernate through the rest of winter, the MPC could be forced to act even more aggressively.
“While it’s hard to be certain, we remain confident that mortgage rates will continue to fall throughout 2025. That should leave borrowers in a much stronger position at the end of the year than they were at the start.
“MPC decisions and what they mean for mortgage rates can be baffling for the everyday borrower.
“As always, the value in advisers providing timely reminders to their customers that they have a trusted expert on-hand is invaluable.”
Sarah Pennells, consumer finance specialist at Royal London:
“The Bank of England’s decision to reduce the base rate to 4.5% will be welcome news to both borrowers with a variable rate mortgage and prospective buyers.
“While the cost-of-living crisis has receded, higher bills – including housing costs – continue to cause pain.
“Our latest research shows that one in five people don’t manage to get to the end of the month without going overdrawn, either every month or from time to time, rising to over one in four mortgage borrowers (27%) and three in ten (30%) renters.
“Fewer than half of UK adults say they have any money left over at the end of the month once they’ve paid their bills.
“The vast majority of mortgage borrowers are on a fixed rate mortgage, and we know that other factors, not just the base rate, have an impact on the competitiveness of fixed rate deals.
“However, those who are on a variable rate mortgage will benefit from a reduction in their monthly mortgage payments.
“According to our research mortgage borrowers only saw a reduction of £4 a month in housing costs on average, compared to a year earlier, with almost four in 10 telling us they were spending more.”
Neil Rudge, chief banking officer for commercial at Shawbrook:
“The decision to cut the base rate to 4.5% will be welcomed by the business community, which has been on the receiving end of a string of difficult economic changes in the past year.
“A stagnant economy, the looming increase to NIC for employers and the potential for tariff induced inflation means SMEs will have lots on their minds in the coming months.
“On the positive side, today’s decision should make finance more accessible for SMEs who have previously been holding off growth plans.
“The onus is on providers now to offer flexible solutions that meet a diverse market.”
Mark Michaelides, chief commercial officer:
“While widely expected, the Bank of England’s decision to cut the base rate to 4.50% reinforces the need to address growth headwinds across the UK and ease pressure on borrowers.
“With further cuts anticipated later this year, this move could be just the beginning.
“Lower tracker rates will instantly impact borrowers, but it remains to be seen how fixed rates might adjust given this move had been largely priced in.
“Nonetheless, the positive move should help lower borrowing costs over the medium-term, bringing much-needed relief to landlords and investors.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“The Bank of England’s decision to cut the base rate to 4.5 per cent comes as no real surprise, given the drop in inflation to 2.5% in the year to December.
“The question is when the next rate cut will come, with the markets pricing in three reductions this year.
“Much attention will be paid to the voting pattern of the committee to see how fast, and far, further rate reductions will occur.
“These will boost the housing market, improving affordability and making budgeting easier.
“Swap rates continue on a downwards path with some lenders dropping their mortgage rates, in part reversing recent increases.
“This rate reduction was largely expected by the markets and has therefore been factored into pricing already.
“However, a continual decline in swaps would enable lenders to price more keenly, easing borrowers’ affordability concerns.
“Those looking to take out a new mortgage or refinance in coming months should plan ahead as much as possible, seeking advice from a whole-of-market broker.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts:
“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.
“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 is concern that once the Stamp Duty holiday ends, there will be a dip in activity and transactions, which is why this rate cut is so important.”
John Fraser-Tucker, head of mortgages at mortgage broker Mojo Mortgages:
“The Bank of England’s base rate cut is good news for mortgage holders across the UK.
“This reduction means real, tangible benefits for homeowners. Variable-rate mortgage customers can expect to see their monthly payments drop.
“For example, for someone with a £200,000 mortgage over a 30-year period, this will be a predicted saving of £29 per month.
“Whilst this may not seem like a lot, it’s a saving of £10,440 over the full mortgage period.
“First-time buyers will also see some positives.
“Lower base rates are likely to result in slightly more attractive mortgage products, potentially improving affordability at a time when getting on the property ladder has been challenging.
“For those coming to the end of fixed-rate deals, now’s a good time to explore the market as lenders are likely to introduce more competitive rates.
“But let’s be clear – this isn’t a magic solution.
“Mortgage rates are still higher than the rock-bottom levels we saw a few years back, and the housing market remains complex.
“My advice? Don’t just sit on this news.
“Speak to a mortgage broker who can break down exactly what this means for your specific situation.
“Every mortgage is different, and personalised advice is key.”
Thomas Cantor, co-head of short-term finance at West One Loans:
“Whilst inflation has crept above the Bank of England’s target of 2% in recent months, the rate of inflation seen over the back end of last year has remained largely stable and significantly below the peak seen towards the end of 2022.
“So today’s base rate cut was largely expected and whilst it may only be a small step in the right direction, the hope is that this trend will continue over the course of the year, bringing some much needed impetus to the economy, helping to drive further positive sentiment in 2025.”
Stephanie Daley, director of partnerships at mortgage adviser at Alexander Hall:
“The Bank of England’s decision to reduce interest rates to 4.5% will come as a welcome one to the nation’s homebuyers, bringing a much needed boost to property market sentiment, following the slight upward pressure on prices caused by increasing inflation levels in recent months.
“However, with the level of inflation remaining above the Bank of England’s two percent target, it’s likely that lenders will continue to act with vigilance and we can expect this ongoing uncertainty to be reflected in mortgage pricing.
“So whilst we are heading in the right direction and some lenders are reducing their rates, those planning their move should continue to seek the advice of an expert mortgage advisor to ensure that they are securing the very best rate available to them in the current market.
“One potentially positive outcome will be the reduction in certain lenders stress rates, which could give a bit more flexibility in affordability for customers and possibly give them more buying or remortgage options”
Jonathan Samuels, CEO of specialist lender Octane Capital:
“A reduction to the base rate is certainly positive news, however, it’s the swap rates market that dictates the level of mortgage affordability passed onto the nation’s home movers.
“The good news is that the mortgage sector has been responding well ahead of today’s decision and, not only have we seen swap rates start to reduce over the course of this month, but many lenders are already reducing their mortgage rates in response.”
Robert Sadler, vice president of real estate at Excellion Capital:
“This rate reduction takes us one step closer to where we need to be. But property investors will welcome this news with more than a little caution.
“While this decision may result in lower interest rates, it still doesn’t feel like we’re approaching the end of the UK’s economic uncertainty.
“Last autumn’s inflationary Budget and Labour’s handling of the economy to date have created a lack of confidence among both investors and lenders.
“In fact, such is the negative sentiment right now that we are seeing lenders demonstrate an unwillingness to even consider incredible deals, particularly retail deals, where the assets are being bought at historically cheap prices with yield potential of 16%. This is despite experienced sponsors with solid business plans.
“If this negative sentiment has any chance of lifting, we’re going to need more proof from this government that they can manage the economy effectively and in favour of the investors who are, let’s be frank, at the centre of helping the economy grow.”
Colby Short, co-founder and CEO of GetAgent.co.uk:
“The move to lower interest rates is no doubt the right one as inflation levels have remained broadly stable for some months now.
“We’ve already seen the mortgage industry react positively in anticipation of today’s news, as swap rates have fallen and many lenders have moved to lower the mortgage rates on offer.
“So whilst the property market may currently be benefiting from a minor surge in activity ahead of April’s Stamp Duty deadline, today’s decision should act as a further shot in the arm, although we expect the long-term picture to be one of more measured growth, with market momentum building gradually as the picture continues to improve.”
Verona Frankish, CEO of Yopa:
“Despite the fact that interest rates haven’t fallen at the speed we expected, we’ve seen a strong and consistent level of buyer activity sweep the property market over the last year and, with a further reduction today, we expect this to remain the case as we look to the year ahead.
“Of course, mortgage rates currently remain far higher than today’s home movers have become accustomed to in recent years and so a degree of caution is advisable.
“However, we’re already seeing lenders react positively by reducing rates and we expect the picture to continue to improve over the course of the year where mortgage affordability is concerned.”
Marie Grundy, managing director, residential mortgages and second charges at West One Loans:
“The Monetary Policy Committee’s rate cut today signals a firm push to revive growth. Business sentiment has taken a hit since last October’s National Insurance hike, and economic performance is trailing behind Government expectations.
“Add the threat of a US trade war into the mix, and the outlook is uncertain.
“Prioritising growth over inflation, the MPC’s move bodes well for the housing market.
“Markets are betting on between three and four more cuts this year, and a 3.75% rate by the year-end seems likely.
“If the economy continues to stagnate, the MPC may need to act more aggressively, but whilst also keeping inflation under wraps.
“For borrowers, news of further rate cuts will undoubtedly be welcomed.
“Whether fast or slow, they’ll likely be in a stronger position by year-end than they were at the start.”
Jason Tebb, president of OnTheMarket:
“As expected, the Bank of England has reduced interest rates by a quarter point to 4.5%.
“With inflation falling in December, indicating that it is seemingly under control even if still above the 2% 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, as the two rate reductions in the second half of 2024 did, leading to an improvement in activity and transaction levels.
“With the Stamp Duty concession ending in March, expected further rate reductions should give the market added momentum as the year progresses.”
Ben Allkins, head of mortgages and protection at Just Mortgages:
“Given the recent positive news on inflation, this had to be the logical next step for the central bank.
“While a persistent threat, we cannot become too blinkered by managing inflation and allow the economy to stagnate.
“This positive step will hopefully be the adrenaline shot the economy needs and serve as the starting pistol for many borrowers to put their plans in action.
“Compared to the previous cut, we have to hope swap rates react positively too and move as we’d expect.
“With a little bit of breathing space and financial year-end approaching for many lenders, it may be enough for some to take another look at their pricing.
“Brokers hearing this today need to mobilise and get out among their clients and their community to share this good news.
“We’ve seen already this year that appetite is certainly there.
“We now need to demonstrate the opportunities that exist as they try to navigate the market.”
Mark Hollands, head of sales and distribution, Bluestone Mortgages:
“Today’s decision to cut interest rates will provide a much needed morale boost to would-be and existing borrowers who have been grappling with higher mortgage costs.
“While this rate decrease won’t impact mortgage rates immediately, it is a step in the right direction.
“Given the current economic and political pressures, there is no certainty as to the direction of travel of interest rates given swap market volatility.
“Now is an opportune time for brokers to demonstrate their value and expertise and handhold customers through these challenging times.”
Jerry Mulle, UK MD of Ohpen:
“Today’s Bank of England base rate cut, to the lowest level in 18 months, should be welcome news for homeowners and prospective buyers.
“The move should signal easing inflation rates and in turn, lower mortgage rates. However, mortgage owners and applicants are not out of the woods.
“While interest rates have dropped, inflation is expected to rise again with changes in the upcoming Spring Budget in March, and uncertainty around how hard the UK economy could be hit by pending US tariffs from the new administration.
“Over the coming weeks and months home buyers may well feel increased stress during what is already a challenging mortgage application process.
“Our research into the current state of mortgage applications reveals that a third (32 %) of UK consumers found rising interest rates the most stressful part of the mortgage application process, rising to two fifths (41%) of Gen Y.
“In extraordinary times like these, the mortgage industry must make the mortgage application process more transparent and inclusive from the outset, to reduce stress in the process where possible.
“With a joined-up approach, the industry can simplify the application process by taking complex legacy technology out of the equation and enable better real-time data sharing between all the stakeholders involved in the home-buying journey.”
Arjan Verbeek, CEO of Perenna:
“Bad economic news has become good news for borrowers.
“The known risk of a slowing UK economy has clearly trumped the unknown risk of rising global inflation on the back of a prospective trade war.
“Gloomier economic data closer to home, with UK economy failing to grow in the final months of 2024 and declining consumer confidence, clearly loomed larger for the MPC.
“The news will be welcomed by those remortgaging, and those looking to get their foot on the ladder ahead of the Stamp Duty changes, supporting demand in the short term.
“But it won’t be a game changer for thousands of frustrated future homeowners who have to continue to postpone their dreams, even in cases where they have a sizable deposit, given the current rules the UK has around affordability.
“If the Government is determined to drive the growth that will benefit the next generation of homeowners, then we need to see regulations shift to support its aims.
“Turning words into action and reviewing the loan-to-income cap for lenders would be the right place to start.”
Holly Tomlinson, financial planner at Quilter:
“Ahead of the Bank of England’s decision, lenders were already making changes. Lenders have proactively reduced rates on various mortgage products in anticipation of the Bank of England’s decision.
“Now that the rate cut is in place, homeowners on variable or tracker mortgages should start noticing lower monthly payments too.
“We may see some lenders introduce more competitive fixed-rate deals in the coming weeks but typically most new deals have already priced in today’s cut.”
Marylen Edwards, director of mortgages at specialist lender MT Finance:
“The MPC’s decision to cut the base rate signals the continuation of an easing cycle, reflecting growing confidence in the Bank of England’s progress on controlling inflation while acknowledging the need to support economic growth.
“The timing of this cut could be particularly significant for the property market, with spring approaching – traditionally a busier period for property transactions.
“The rate reduction is likely to catalyse increased market activity, potentially offering first-time buyers a more favourable entry point.
“However, the market response is expected to be measured and nuanced.
“While the cut represents a positive shift, borrowers should temper expectations, as mortgage rates may not immediately reflect the full extent of the base rate reduction.”
Ryan McGrath, director of second charge mortgages at Pepper Money:
“Today’s decision won’t have been an easy one, but it’s the monetary boost the economy needs to break away from the shackles of stalling growth and falling business confidence.
“Home buyers stand to benefit from this base rate cut, as lenders have been provided with the confidence needed to reduce rates, which will benefit new market entrants.
“Yet, for those homeowners who are still lucky enough to have fixed their mortgage pre-2022, their appetite to leave this will be low.
“A second charge mortgage is one way for homeowners with unsecured debt to consolidate in order to lower their monthly outgoings without disturbing their current mortgage deal.”
Mike Randall, CEO at Simply Asset Finance:
“Businesses up and down the country will be breathing a sigh of relief with rates ticking downward.
“Not only will it give some much needed breathing space for those squeezed by the NI rise; those eager to grow will find borrowing cheaper.
“Combined with the recent publishing of the Governments’ growth strategy, the outlook for 2025 is looking much more positive.
“But with Trump-led trade wars perhaps tempering the speed of future cuts, the Government cannot afford to take its eye off the ball when it comes to creating an environment that enables domestic growth to flourish.”
Phil Lawford, national account manager, Saffron for Intermediaries:
“A reduction in the Bank of England base rate is a positive and well-timed move, and is likely to spark activity in the property market.
“Confidence is key, both for buyers and housebuilders, who need assurance that demand will remain strong.
“Following a positive start to the year, this rate cut should help maintain momentum, giving developers – small and large – the confidence that their projects will sell.
“Despite this, affordability pressures will continue to weigh on buyers’ minds, reinforcing the need for broader solutions.
“While discussions around loosening LTI caps could provide some relief, the bigger issue remains supply.
“The Government’s grey belt policy was initially seen to unlock land for development, yet the House of Lords has now labelled it ‘largely redundant’ due to subsequent planning reforms.
“If housing delivery is to improve, a clearer and more effective approach to planning reform is required.”
Nicholas Hyett, investment manager at Wealth Club:
“Recent economic data points to a slowdown in the UK economy – GDP came in lower than expected, inflation has fallen and unemployment has ticked up.
“The outlook is gloomy too, with many companies thought to be considering job cuts before a rise in the living wage and higher national insurance contributions in April.
“Against that backdrop the Bank’s decision to cut rates is no surprise and was widely expected. Rate-setters, and the Government, will be hoping a 0.25% cut provides the post January pick-me-up the economy needs – though some MPC members voted for a more radical reduction.
“However, the real risks in the future are largely unknown.
“Will Trump’s trade war rock the global economy? Will the UK become a tariff target? How many jobs are at risk from rising labour costs? Will the Chancellor hike taxes again in the spring?
“With all those unknowable risks out there, this rate cut could be seen as much as a shot in the dark than a shot in the arm.”
Frances Haque, chief economist at Santander UK:
“The cut to the Bank of England base rate will come as some light relief to those homeowners with fixed rate mortgages maturing this year, and should see a boost to overall household confidence, following a period of decline at the end of 2024.
“While this is a positive story overall, with rates sitting lower than they were two years ago, borrowers coming off 5-year fixed terms will still be moving to rates significantly higher than their current rate.
“With house prices set to continue to rise, albeit at a slower pace, and mortgage approvals remaining strong, spurred on by the upcoming change to Stamp Duty, we are however looking towards a more buoyant housing market as we progress through the year.
“Our forecasts are still pointing to a further three cuts this year – with the next to come in May, allowing the Bank of England to strike a balance between containing inflation, while boosting economic growth, and with that, supporting household confidence and the mortgage market.”
Jonathan Handford, managing director at national estate agent group Fine & Country:
“Today’s announcement marks a pivotal moment for the housing market and, more importantly, a significant step forward for first-time buyers on the path to homeownership.
“The first interest rate cut of 2025 paints an optimistic picture for the year ahead and should provide a much-needed confidence boost for prospective buyers.
“Lower rates are likely to push lenders to reduce mortgage costs, and have the potential to trigger a ‘rate war,’ with banks and lenders slashing rates to remain competitive.
“While the housing market experienced steady growth last year, affordability remains a
hurdle for many.
“However, with interest rates continuing on a downward trajectory, previously hesitant buyers — especially first-time purchasers — may see this as the right moment to step onto the property ladder.
“In addition, the upcoming April deadline for changes to the Stamp Duty threshold — which will be lowered considerably — has also been propping up the market in recent months.
“Mortgage approvals in the UK rose unexpectedly in December, as buyers sought to beat the upcoming changes.
“This combination of lower interest rates and shifting tax policy may further accelerate decision-making among those looking to get their foot on the property ladder.
“The Government and the Bank of England will need to strike a delicate balance — ensuring borrowing remains affordable while keeping inflationary pressures in check.
“The housing market’s trajectory in 2025 will be shaped by the interplay of lower interest rates, shifting fiscal policies, and broader economic conditions.
“If lenders aggressively lower mortgage rates, we could see heightened competition among buyers, driving short-term demand and pushing house prices up.
“Today’s rate cut could be the catalyst for a more dynamic and accessible market in the months ahead.”
Richard Pike, chief of sales and marketing at Phoebus Software:
“The Bank of England is likely to be aiming for a normalised interest rate of around 3.5% moving forward to appease both borrowers and savers as ‘the new norm’.
“Today’s cut is a step towards that target rate and will be received well by borrowers on variable rate products.
“Whether swap rates particularly react to this cut in the longer term remains to be seen.
“What this rate cut will do is encourage economic growth and investment.
“You’d hope that as well as increasing mortgage originations volumes, this will start to show in major house building projects commencing with a view to creating the housing stock our industry and country needs.
“From an arrears perspective, following this morning’s good news on Q4 figures, lower rates will only assist lenders maintain portfolio performance.”
Rachel MacCutchan, sales director for Morris Homes:
“The Bank of England’s (BoE) interest rate cut is welcome news for prospective homeowners, helping to open up more opportunities for them on the property market.
“We’ve seen Barclays Bank react already by reducing its rates and expect more to follow, which will lead to more affordable mortgages, make houses more accessible, and increase confidence in the housing market.
“The BoEs decision comes at a perfect time as we recognise New Homes Week, marking a positive move which will help people take their first step on the property ladder.
“At Morris Homes, we’re here to support them to do this.”
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.”
Andrew Gething, managing director of MorganAsh:
“The consensus for a cut to start 2025 was already high, but last month’s surprise news on inflation only increased those chances.
“Even so, this decision is certainly welcome, particularly among those not on fixed rate mortgages and the many families that have continued to feel burdened by persistent financial pressures.
“Rather than a case of opening the flood gates for further movement, cuts like we’ve seen today are now likely to be far less frequent.
“As pressures on households and individuals remain, it’s an important reminder to firms to stay close to those clients who are at the biggest risk of facing difficulties.
“Just recently, we’ve seen the FCA remind mortgage intermediaries, as well as the wider financial services sector, of the importance of identifying and supporting vulnerable customers as it remains committed to embedding and enforcing Consumer Duty.
“Managing customer vulnerability is undoubtedly a clear weakness for many firms.
“The upcoming vulnerable customer review from the FCA is likely to reiterate this.
“No matter the path of interest rates or the frequency of cuts, firms absolutely need to know who their vulnerable customers are and what outcomes they are receiving. Tech adoption plays a critical role in making this a reality.”
Kevin Roberts, managing director, Legal & General Mortgage Services:
“Today’s base rate decision will be encouraging news for homebuyers, and some lenders have already priced this change into their mortgage rates over the past few days.
“Our broker data has shown a significant rise in first-time buyers searching for mortgages in the past year, and this latest rate reduction will give confidence to those looking to step onto the property ladder.
“To take advantage of these opportunities, it is important for buyers to speak with an adviser to get the best possible deal.
“This gives people the best chance of navigating changing rates and landing a product that fits their needs.”
Paul Broadhead, head of mortgage and housing policy at the Building Societies Association:
“The BSA Property Tracker Report issued this morning shows first-time buyers are feeling more positive about the housing market and getting on the property ladder.
“Today’s decision by the MPC to cut the Bank Rate will therefore be very welcome news for aspiring homeowners and is likely to give a further boost to consumer confidence.
“However, despite their optimism, we know that first-time buyers face a considerable affordability challenge.
“Our report shows around two-thirds of people consider the biggest barriers to homeownership are affordability of monthly mortgage repayments and raising a deposit.
“Bank Rate cuts alone will not ease affordability.
“We need a long-term housing strategy, alongside a review of mortgage regulation that considers the relative costs and benefits of stricter regulation versus the social benefits of homeownership, to support more first-time buyers into homeownership.
“Building societies have a proven track record of lending responsibly and supporting first-time buyers and want to do more. We are therefore very keen to work with the FCA to achieve this.“
Gary Wilkinson, CEO of Redwood Bank:
“The decision to drop the base rate is welcome news for property landlords and other business property owners, albeit the fall is not happening as quickly as was anticipated or hoped for by many in the property sector.
“Those property firms looking to buy or refinance properties to grow their portfolios or businesses looking to fund and acquire commercial premises could now benefit from lower interest rates, potentially reducing their interest costs and improving their leverage.
“Those with existing borrowing on variable rates will benefit from a fall in their interest payment.
“Businesses with surplus funds held in savings accounts should review their interest rates to make sure they remain happy with the returns on these accounts.”
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.”
Nick Hale, CEO of Movera:
“The Bank of England’s decision to lower the base rate marks a positive step for the mortgage and property markets, offering much-needed relief to borrowers after a prolonged period of high rates.
“While this cut could help boost confidence, the extent of its impact will depend on how quickly lenders pass on savings and whether further reductions follow in the coming months.
“For brokers and conveyancers, this shift may encourage more homebuyers and movers to re-enter the market, alongside continued demand in the remortgage sector.
“However, with affordability still a key concern, speed and efficiency in transactions will be crucial to helping borrowers secure the best available deals.
“The ONS inflation announcement later this month will provide further clarity on the long-term outlook, shaping expectations around future rate movements.
“We are focused on supporting the industry with digital solutions that make the homebuying and remortgaging process as smooth as possible.
“Whether rates fall further or stabilise, ensuring transactions are fast and efficient will be key to keeping the market moving.”
Hugo Davies, chief capital officer and managing director for mortgages at LendInvest:
“This rate cut is a step in the right direction and a sign that borrowing costs are finally heading the right way.
“That’s good news for homeowners, landlords, and developers who have been navigating expensive finance for too long.
“But one cut will not be enough to revitalise the market or unlock the supply of homes the UK needs.
“And to be honest, the cut could have, and should have gone further.
“A 0.50% cut would have given the markets a stronger signal of intent – and it’s clear some of the BoE panel wanted that move. It’s a pity, in our view, it didn’t happen.
“We need sustained action to drive affordability, encourage investment, and support growth. The Bank of England has made a start – now it is time to go further and relieve the squeeze.”
Peter Stimson, head of product at the mortgage lender MPowered:
“What matters here is not the decision, it’s the vehemence with which it was taken.
“The markets had regarded a 0.25% rate cut as a nailed-on certainty.
“But what has raised some eyebrows is the strength of feeling among the Bank of England’s ratesetters.
“The only two dissenting voices on the Bank’s nine-member committee wanted to cut more, not less, off the Base Rate.
“All of which will lend credence to the idea that a flurry of further base rate cuts could be on its way.
“The swaps curve – which ultimately determines how lenders price their mortgages – is currently suggesting that we could see a further three base rate cuts by this time next year.
“Swap rates can ebb and flow, but nevertheless the fact that the markets are now anticipating three more cuts should enable lenders to start trimming the rates they offer customers.
“January is traditionally a time of intense rate-cutting as lenders slug it out for market share, but last month’s competition was relatively subdued. That could now change.
“Demand from borrowers is strong, and separate data from the Bank of England showed the number of mortgage approvals jumped unexpectedly in December.
“Today’s decision may not open the floodgates immediately, but competition could heat up sharply in the coming weeks as lenders battle for borrowers’ business.”
Nick Smith, group managing director for alternative finance lender Reward Funding:
“We naturally welcome any lowering of interest rates, but an 0.25% decrease is too little, too late and doesn’t go far enough when you consider the financial pressures businesses are currently under.
“As a lender which speaks to SMEs and entrepreneurs on a daily basis, we see first-hand that rising operating costs caused by pending increases to employee national insurance contributions and the minimum wage, are creating a cash flow squeeze that will only result in wage freezes, redundancies and further stifle growth.
“Cutting interest rates was a small glimmer of hope, but 0.25% does little to mitigate rising running costs or ease the financial burden being placed on so many firms by the Government’s current approach to the UK economy.
“What’s interesting is of the nine votes by Monetary Policy Committee members, seven voted for 0.25% and two voted for a 0.5% cut which clearly signals that more rate cuts are likely in the future. Fingers firmly crossed!”
Jonathan Hopper, CEO of Garrington Property Finders:
“The prospect of cheaper mortgages will give a decisive nudge to thousands of would-be buyers who kept their powder dry in 2024.
“In normal times a reduction in borrowing costs can prompt those planning a move to inch up their budget, and the result tends to be rising house prices. This time, not so much.
“While there is plenty of demand from buyers, the abundance of homes for sale is keeping price inflation in check.
“Many buyers remain intensely price-sensitive, and as they survey a market in which they’re often spoilt for choice even in prime areas, some are happy to walk away from homes they like but feel are overpriced.
“The Bank’s decision has tipped the scales further in favour of buyers, but the inflationary consequences may be more muted than usual.”
David Hollingworth, associate director at L&C Mortgages:
“The decision to cut by one quarter of a percentage point was expected but mortgage borrowers will be buoyed by the fact that the decision was split, with two members of the Committee in favour of a deeper cut.
“Mortgage rates are significantly better than they were during some of the highly volatile periods of the last couple of years but have bobbed up and down, as markets have been hesitant in how quickly they expect rates to come down.
“The better-than-expected inflation data has calmed nerves and that’s seen an easing back in rate projections, which has already helped some, including Barclays, Halifax and Coventry Building Society, to pass improvements through in fixed rates this week.”
