Interest Rate cut to 4.25% – experts respond

Interest Rate decision: “a much-needed boost to the UK property market”

 

Ryan Etchells, Chief Commercial Officer at specialist property lender Together, said: “The fallout from US President Donald Trump’s policy on tariffs has caused a huge amount of instability, leading to economists predicting a slowing global economy.

“To combat the likelihood of US policy depressing the UK economy, The Bank of England’s has decided to cut its base rate by 0.25% to 4.25%, lowering the cost of borrowing for individuals and businesses, which will provide a much-needed boost to the UK property market.

“It will mean those who were facing steep monthly mortgage payments will now be able to access lower rates, allowing more home buyers who would previously have been priced out of the market to achieve their property ambitions.

“Homeowners on variable rate and tracker mortgages will also feel the benefits of the central bank rate cut, as will buy-to-let landlords, who have had to contend with higher costs and increased red tape over the past few years.

“Despite these recent challenges, our latest research reveals a resilient buy-to-let market, with a third of those landlords planning to expand or diversify their portfolio in the next 12 months. Those keen to seize an opportunity and move forward with their property plans are best to consider the wide range of financial products available, such as commercial and buy-to-let and commercial mortgages or bridging loans for fast, flexible finance.”

 

Lily Megson, Policy Director at My Pension Expert, said, “Another interest rate cut will feel like a welcome step forward for consumers. It suggests the Bank of England sees enough progress to begin loosening its grip, and while uncertainty hasn’t disappeared, a sense of stability does offer a chance for savers to take stock and refocus on long-term financial goals.

 

 

“But savers will no doubt understand, this is no time for complacency. Inflation remains above target, and forecasts largely suggest it may creep up again later this year. Factoring in continued economic challenges, the market could yet remain unpredictable. It’s key that savers stay proactive, not passive.

 

“This is a good opportunity for savers to revisit their financial strategy, check whether your savings are still delivering value, and seek independent financial advice if unsure. Staying engaged and informed will be the best defence against market noise and short-term disruption when putting together a long-term financial plan.”

 

 

Darrell Walker, group sales director at Chetwood Bank for ModaMortgages and CHL Mortgages for Intermediaries, said: “This latest reduction to the base rate is another step in the right direction. As borrowing costs ease, we expect to see investor activity increase – particularly as the data so far this year has pointed towards a stable and growing market. This cut should deliver a further confidence boost and stimulate broader market momentum, even if some buyers do opt to sit tight until further base rate cuts arrive.

“Now, as demand picks up, it’s more important than ever that brokers and borrowers can collaborate with lenders who can offer efficient processes, fast decisions and clear communication. In a more competitive landscape, speed and service are everything – lenders must be prepared to provide both, in equal measure.”

 

 

 

Alpa Bhakta, CEO of Butterfield Mortgages Limited, said: “The Bank of England’s second rate cut of the year comes at an ideal time. Activity levels in the prime central London (PCL) market improved steadily throughout Q1, and with borrowing costs remaining the most significant driver of sales, today’s reduction should further reinforce the momentum and confidence permeating the property sector. Continued support from lenders for borrowers and brokers alike will be key in ensuring the market fully capitalises on a more supportive monetary environment in the coming weeks.”

 

 

Paresh Raja, CEO of Market Financial Solutions, said: “The markets inked in this base rate cut several weeks ago, with many lenders having already dropped rates over the past fortnight. As a result, today’s decision might be met with a somewhat muted response. But we should be careful not to take another 0.25% reduction for granted; rates are trending in the right direction and borrowers will welcome every cut.

“With more rate cuts expected in the months to come, some property buyers and investors might decide to bide their time. But there’s an overwhelming sense that demand is returning to the market thanks to the increasingly favourable interest rate environment. Coupled with the usual seasonal trends we see, we’re expecting the summer months to be a busy period, and the focus from lenders has to be on fast, decisive action – giving brokers and borrowers clarity on product availability and rates, along with prompt decisions on applications, will be crucial in allowing the market to flourish.”

Tim Parkes, CEO of RAW Capital Partners, said: “The only real question today was seemingly whether the Bank of England would be so bold as to vote for a 0.50% reduction. For now, the Bank is clearly sticking to a conservative strategy and, while there is pressure for more significant cuts, the broader expectation is still that there could be as many as four more base rate cuts from the Bank’s five remaining meetings this year.

“We are on the right path, even if the speed of travel is not fast enough for some. The base rate is now a full percentage point lower than the recent 5.25% peak we saw for much of 2023 and 2024. If indeed the base rate does continue to fall to 3.5% or even 3.25% by the end of this year, it will likely encourage many more property buyers and investors to enter the UK property market. Transactional activity and house prices could both see an uplift as a result, particularly as mortgage lenders reprice their products to reflect the medium-term predictions of a steadily falling base rate.”

 

 

Paul Noble, CEO of Chetwood Bank, said, “Following a second consecutive fall in inflation, many were expecting a bolder move from the Bank of England. The decision to cut rates by 0.25% rather than half a percentage point might appear underwhelming to some, given the challenges that are being faced – especially the uncertainty around Trump’s tariff hikes.

 

“While the central bank has taken a cautious approach for some time, today’s move could risk underutilising a vital opportunity to restore confidence and stimulate growth in the market. That will come from the MPC making bold, market-altering decisions at its monthly meetings, rather than smaller, potentially less impactful changes that fail to make the most of our current inflationary improvements.

 

“For savers, the rates available today may be the most competitive we’ll see for some time, so it’s important they take steps to protect their financial position. A quick review of your savings could help ensure your money continues to deliver value, and that you’re not missing out on the strongest rates while they last.”

 

 

Hamish Martin, Partner at LAVA Advisory Partners, said: “With the Bank of England finally trimming the base rate to 4.25%, we could well see a noticeable shift in M&A appetite, especially from private equity, who have been slightly more cautious of late with such comparatively high rates.

 

 

“Lower borrowing costs open the door for more leveraged deals, and we’re already seeing increased interest in lower-mid-market assets that might have been priced out just a few months ago.

 

 

“For founders and business owners considering an exit, this could mark the start of a more favourable window, especially as buyers start to move more decisively and have lower-cost capital at their disposal.”

 

Ben Thompson, Deputy CEO, Mortgage Advice Bureau:

“Today’s rate drop won’t come as much of a surprise, especially considering recent goings on across the pond. Despite inflation being likely to tick up again in the near term, the focus has now flipped to ensuring economic growth. Markets have been quick to price in future rate cuts, and consequently, it’s great to see so many mortgages now priced below 4%.

 

 

“We now have real wage growth, lower mortgage rates, and a favourable rate outlook, plus a record high number of mortgage products overall. We’re even seeing some helpful lending for first time buyers, and hopefully that continues to grow, enabling more renters to become homeowners.

 

 

“Notwithstanding what has recently become ‘predictable unpredictability’ globally, it feels as though we have a small tailwind for the first time in a long time (at least domestically). It does now feel like a good time to buy, and a better time to refinance for those that need to.

 

 

“For customers looking to get mortgage ready, now is a great time to take advantage of the market. With the expertise and guidance of a broker, you can secure a deal that works for you and your financial circumstances.”