By The Bank of England has just made the decision to cut the base rate to 4.0%.
- Following a hold in June, the rate has today been cut to 4.0%.
- This comes despite inflation (CPI) sitting at 3.6% in June 2025, higher than the Bank of England target rate of 2.0%.
- The decision to reduce the base rate by the Monetary Policy Committee was the result of five members voting for a cut to 4.0%, with four members voting to hold at 4.25%.
Kevin Shaw, National Sales Managing Director, LRG comments that the cut is welcome news for the property sector below:
Encouraging signs for the property sector
The Bank of England’s decision to cut the base rate by 0.25% is a welcome and timely move for both the property sector and the economy more generally. With the rate now back to where it was in March 2023 and a further cut likely before the end of the year (probably in November), this provides renewed momentum for buyers, sellers and developers alike.
Growth supported by sensible policy
After a sluggish spring for GDP, with declines in both April and May – not helped by the Trump lumps and bumps – the Bank has rightly judged that now is the moment to ease the brakes.
A property-led approach to growth has been a priority of this government for the last year, and we are now seeing that strategy bear fruit. With careful monetary easing, the sector now growing in a measured, and therefore, a sustainable way.
Our own figures reflect this steady growth. Sales in July were the strongest for over a year – which is especially encouraging given that the summer is typically a quieter period for property transactions.
Risks ahead at the Budget
There are, however, headwinds on the horizon. October’s Budget is likely to bring tax changes, and there has been little, so far, to suggest that the government will respond to the sector’s repeated pleas for fiscal measures to support the property industry, such as a reduction in Stamp Duty. The Chancellor will need to be very careful not to implement tax changes which offset the benefits of falling interest rates and risk stalling recovery.
The property market remains very price-sensitive. While for many, this interest rate cut will help mitigate the rising cost of living alongside any future tax increases, those gains must not be undone.
Resilience, not overheating
The market does not appear to be in any danger of overheating; it is responding to improving conditions in a cool and measured manner. We expect that to continue, and early signs from our sales figures suggest that property will remain a vital driver of growth for the economy.
Further indusrty comments can be found below:
Stephanie Daley, Director of Partnerships at mortgage advisor Alexander Hall, commented:
“We’ve already seen significant strength return to the mortgage sector since interest rates began to stabilise and trend downwards. Today’s decision to further reduce the base rate will only serve to fuel this momentum, easing the cost of borrowing for the nation’s homebuyers even further.
This welcome boost comes in addition to the recent decision to make the Mortgage Guarantee Scheme permanent, alongside the loosening of income lending restrictions, both of which have already had a positive impact on mortgage affordability.
As we move into the second half of the year, this positive shift in the mortgage landscape is expected to support sustained demand and contribute to the long-term resilience of the market.”
CEO of Foxtons, Guy Gittins, Commented:
“Today’s decision to cut the base rate is a welcome development for the property market and one that should continue to support year on year growth, as we saw in the first half of 2025.
This interest rate reduction, along with improving mortgage affordability and changing lending criteria from the new mortgage guarantee scheme, all provide further reassurance and stability for buyers and investors.
As we move into the second half of the year, our outlook remains cautiously positive given the continued appetite for vendors to bring great property to the market, while taking into consideration wider macro-economic factors.”
Jonathan Samuels, CEO of Octane Capital, commented:
“The Bank of England’s decision to cut the base rate today is a welcomed move, offering a much-needed boost to the property market and building on the momentum seen over the last 12 months.
While inflation remains a concern, we’ve already seen many lenders acting in anticipation of today’s cut and the resulting reduction in borrowing costs will provide immediate relief, not just to the nation’s homebuyers, but also to those within the industry looking to utilise specialist lending products.
A rate cut will further encourage developers to push forward with projects and bring much needed housing stock to the market and specialist lending plays a crucial role here, by offering flexible and accessible financing,
As we move into the second half of the year, the combination of lower borrowing costs and the support from specialist lenders will be key in driving continued growth in the property sector.”
Thomas Cantor, Co-Head of Short-Term Finance at West One Loans, commented:
“While the Bank of England’s decision to cut the base rate today is a positive move for the property market, it’s important to note that this move has already been largely priced in by lenders.
The expectation of a rate cut has been building for some time, however, it will continue to support market confidence and allow developers to move forward with critical housing projects.
Specialist finance will continue to play a key role in ensuring projects are funded and completed, contributing to the ongoing stability and growth of the property sector.”
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