Bank of England Cuts Base Rate to 4.25% – What It Means for You
Today, the Bank of England announced a drop in its base interest rate to 4.25%, giving a welcome boost to borrowers across the UK. This is the second rate cut we’ve seen in 2025 so far, and many experts believe more could follow in the months ahead.
Why have rates been cut?
There are a few factors at play here. Inflation is easing off, oil prices have hit a four-year low, and global trade is shifting. For example, Trump's latest round of tariffs is forcing China to redirect goods to other markets - including the UK - which could push prices down further and contribute to a deflationary environment.
The aim of this rate cut is to support economic growth and keep borrowing affordable. Some financial analysts, including Morgan Stanley, are predicting the base rate could fall to 3.25% by the end of this year, and possibly to 2.75% by mid-2026.
What does this mean for mortgages?
Put simply, this is good news if you’ve got a mortgage - or if you’re planning to get one.
If you're on a tracker mortgage, you should notice a difference in your monthly payments pretty quickly. For those on a fixed rate, it won’t change your payments just yet, but when you come to renew your deal, you’ll likely be offered a lower rate than you would have seen just a few months ago.
Some lenders had already anticipated today’s cut. HSBC dropped their rates last week, with all their products now falling below 5% - the first time we’ve seen that since 2022. And if you’re a buyer with a healthy deposit, there’s a good chance you could secure a mortgage deal under 4%.
What about the property market?
Lower interest rates tend to stimulate the property market. Borrowing becomes more affordable, meaning more buyers are in a position to move - and that increased demand often pushes up property values. More buyers means more competition, which is great news for sellers too.
Although activity slowed a bit in April, we could see momentum pick up again as the impact of this rate cut filters through. If you’re thinking about making a move - either buying or selling - now could be the right time to get ahead of the curve.
Final thoughts
As always, these changes affect everyone differently. Whether you're looking to remortgage, buy your first home, invest in property, or sell, it’s worth getting professional advice tailored to your situation.
If you'd like to know what this rate change means for you, your mortgage, or your next move on the property ladder - get in touch with us today. We're here to help you navigate the market with confidence.
And if you know someone who might benefit from this insight, feel free to pass it on.