UK Interest Rates Cut to Lowest for More Than Two Years – What This Means for the Property Market

After what sounds like a nail-biting vote, the Bank of England's Monetary Policy Committee (MPC) has, for the third time this year, cut the base interest rate. The new rate stands at 4%, its lowest level for more than two years. The decision was a close call, with a second vote needed to secure it, and the committee was split five to four in favour of the cut, with one member pushing for an even steeper reduction.

This move is intended to take the "brakes off the economy" and provide some much-needed stimulus, particularly after a month of internal and external financial pressures. While this is excellent news for many mortgage-holders and those looking to borrow, it's not such a good day for savers, who will likely see smaller returns on their cash.

Industry Reaction: The general feeling from the industry is one of cautious optimism, and we must give credit where credit is due for these insights, sourced from BBC News and The Negotiator.

• Matt Smith, Rightmove’s Mortgage Expert: As expected, this is the third cut of the year. While we might see lenders trimming their rates a little further, Matt believes the real story is the improvement in affordability and a boost in confidence among home movers.
• Nick Leeming, Chairman of Jackson-Stops, sees this as "timely relief for mortgaged homeowners" and suggests that lower borrowing costs will help unlock activity. He points out that regional disparities are still key, with specific "lifestyle-led, commuter-friendly locations" already showing signs of renewed interest and modest price growth.
• Paul Noble, CEO of Chetwood Bank: Paul’s view is that while the cut is welcome, it’s a bit of "slow progress" for an economy needing a stronger push. He argues the MPC could have acted sooner and more decisively, and that "leadership isn’t just about reacting when conditions are safe."
• Paresh Raja, CEO of Market Financial Solutions: Paresh feels the cut was justified, given the softening labour market and sluggish economic growth. He's hopeful this will give the property market the boost it needs.

Condition and Outlook: The market is still showing signs of being subdued, but there are definitely "green shoots" of recovery, especially in areas driven by essential needs rather than luxuries.

• Affordability: This is improving, which is excellent. However, there's a delicate balance. Rising employment costs, such as National Insurance Contributions and the National Living Wage, are prompting businesses to increase prices, particularly for food. The Bank of England is now forecasting that inflation will peak at 4% in September, which is double the target rate.
• Business Pressures: The Bank's report notes that some companies are already cutting staff to mitigate these higher costs. This suggests that while borrowing might be cheaper, the broader economic landscape still has its challenges.
• Consumer Behaviour: We're seeing consumers becoming more savvy with their spending, "trading down" to own-label products and cheaper cuts of meat, which is a clear indicator of cost-of-living pressures still being felt.
• A "Finely Balanced" Path: Andrew Bailey, the Governor of the Bank of England, noted that the decision was "finely balanced." This is a key point—any future rate cuts are not a foregone conclusion. They will be made "gradually and carefully," depending on how inflation and the broader economy evolve.

Action for Surveyors and Clients:

• For Surveyors: We can all expect a potential increase in instructions, particularly from clients who are mortgage-dependent. This is an excellent opportunity to establish yourself as the go-to experts, so be prepared to answer questions about affordability, the likelihood of further rate cuts, and the regional market's performance. Your role in providing clarity and value will be more critical than ever.
• For Homebuyers and Sellers: Now might be a very good time to transact, as affordability has improved. However, advise clients to keep a close eye on the broader economic picture, as inflation and wage costs could still impact their long-term financial health.
• For Existing Borrowers: It's a good idea to shop around, as lenders may pass on some of the rate cut. Competition is fierce, so there may be some great deals available.
• For Investors and Landlords: With borrowing costs easing, yields may come under some pressure, but so will returns on cash savings. It’s a good time to review portfolios and consider whether to fix or stick with variable rates.

Additional Information 

• Next Bank of England rate decision: 18 September 2025.
• Inflation forecast: The Bank now expects inflation to peak at 4% in September, which is double its target.
• Key risk: Future rate cuts are not guaranteed and will depend on how inflation and the broader economy evolve. The next decision will be keenly watched.