The UK property market received a fresh boost as the Bank of England cut its base interest rate by 0.25%, lowering it to 4.25%. This move, widely predicted by analysts and industry experts, marks the second reduction of the year and reflects continued progress in bringing inflation under control.
The Monetary Policy Committee (MPC) voted 5-2-2 in favour of the cut, citing encouraging signs of disinflation. Inflation fell to 2.6% in March, edging closer to the Bank’s 2.0% target. Some members even pushed for a larger cut, while others preferred to keep rates on hold, suggesting the debate is far from over—but the direction of travel is clear. “There has been substantial progress on disinflation over the past two years,” said the Bank of England in a statement. “That progress has allowed the MPC to withdraw gradually some degree of policy restraint.”
Market Optimism Builds
The announcement has been met with strong support from across the property industry. Lower borrowing costs are expected to fuel momentum in both the sales and mortgage markets heading into the summer months. Dominic Agace, Chief Executive of Winkworth, commented: “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 rates. These new lower rates and recent major trade deals showing the UK is regaining its international reputation—boosted by the expected announcement today on a deal reached on US and UK tariffs—mean sentiment will remain positive in the property market.”
What’s Next?
The next decision from the MPC is scheduled for 19th June 2025, and most analysts expect at least one or two more rate cuts before the end of the year. The consensus view is that interest rates will eventually settle somewhere in the low 3% range—a level that supports steady housing market activity without overheating. As the economic landscape begins to stabilise, signs are emerging that both buyers and sellers are becoming more confident. With borrowing costs falling and demand rising, the outlook for the UK housing market is increasingly optimistic heading into the second half of 2025.
Source: Prime Resi Backlink
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