Comments from industry leaders following the Bank's reduction in the base interest rate to 3.75% after three months being held at 4%.
18th Dec 20250 1,411 6 minutes read David Callaghan
The Bank of England has cut the base interest rate by 0.25% to 3.75%, its lowest level in nearly three years.
News that the inflation rate fell further than expected on Wednesday to 3.2% probably influenced the Bank’s Monetary Policy Committee (MPC), led Governor Andrew Bailey (main picture).
A sluggish economy will also have been a factor considered by the MPC as it looked at whether to freeze the rate as it did last month.
Close voteIt was a surprisingly close vote, with five members opting for a cut of 0.25% and four choosing to keep the rate static at 4%.
Further cuts at the next two MPC meetings in February and March are also being predicted by some analysts.
The decision to reduce the rate will speak a mortgage price war agents and brokers are now predicting.
Price war
Simon Gammon, Managing Partner, Knight Frank
Simon Gammon, Managing Partner at Knight Frank Finance, says lower inflation “sets the stage for a price war in January”, and that “it’s possible we see two-year fixed rates dip below 3 per cent by the spring”.
Mark Harris, Chief Executive, SPF
Mark Harris, CEO at SPF Private Clients, says: “Given how relatively quiet activity is with the usual pre-Christmas lull, we would expect to see a 3.49 per cent rate in late December or early January.
“It might take a little longer for five-year fixes to breach the 3.5 per cent barrier but it could happen in the new year.”
Industry reactionAgents
Kevin Shaw, National Sales Managing Director, LRG
“Today’s reduction in interest rates is very welcome news – for homeowners, buyers, property professionals, and no doubt Government ministers.
“With a reduction in interest rates we expect an increase in activity and therefore transactions. Across LRG brands, applicant numbers are already up 15% year-on-year in December, and we’re seeing a significant number of vendors ready to launch in early January,” he says.
“Two year and five year fixed rate mortgage pricing has already shifted in anticipation and tracker borrowers will also feel the benefit.”
Amy Reynolds, Head of Sales at Richmond estate agency Antony Roberts
“This 25 basis points cut was almost nailed on, with markets also pricing in the possibility of a further reduction early next year. That would bring us closer to the widely-anticipated neutral rate of around 3 to 3.5 per cent.
“For London buyers, this is already feeding through into more competitive mortgage pricing and renewed confidence, which should underpin transaction volumes and support modest price growth rather than a sharp rebound or further correction.”
Nick Leeming, Chairman at Jackson-Stops
“Today’s news is a shot in the arm for the housing market just as we enter peak property browsing season over the Christmas break.
“Lower borrowing costs is a key driver of renewed buyer confidence. Unlocking more competitive pricing should lower monthly repayments for homeowners on variable or tracker mortgages, improve affordability at the low to mid end, and stimulate buyer activity.
“We expect to see a gradual increase in buyer enquiries, improved sentiment, and a more balanced market, with the potential to encourage discretionary movers and international buyers back into the market,” he says.
“The sprinkle of good news for the housing market has come at a much-needed time after a market freeze in the run up to the Budget. Whilst the consequences of the resulting mansion tax have yet to be determined, many are now breathing a sigh of relief with certainty in the air and added economic confidence from falling interest rates.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman
“This cut is not a great surprise given the news that has come out this week which isn’t all good for the economy.
“The encouraging news is that the housing market has been relatively resilient despite many concerns about the contents of the Budget, which turned out not to be as bad as anticipated.
“We don’t expect fireworks after the new year but now interest rates are a little lower, we do expect a gradual improvement with property price increases tempered by continuing concerns about the economy and the amount of choice available,” he says.
“Many of our customers have been sitting on their hands, not knowing which way to turn but they haven’t withdrawn from the market altogether. Many are now saying since the Budget – ‘why not?’ rather than ‘why?’, which is what they were saying previously.”
Matthew Thompson, Head of Sales at Chestertons
“Many house hunters use December to review their finances, so a rate cut is well-timed. Alongside easing mortgage rates, it should help underpin buyer confidence and support activity as the market moves into 2026.”
Nicky Stevenson, Managing Director of Fine & Country
“This cut will be welcomed by households and lenders alike. While inflation remains above target, the direction of travel matters, and today’s decision should help unlock pent-up demand.
“Lower rates, combined with a more benign Budget backdrop, are likely to translate into stronger enquiries and transactions in the New Year. We anticipate momentum building as affordability improves and confidence returns, setting a positive tone heading into spring.”
Industry leaders
Nathan Emerson, CEO at Propertymark
“As we round the year off, it is extremely positive to see the Bank of England in a position where it has the confidence to make what is now a fourth base rate cut within twelve months.
“Although mortgage agreements vary, today’s news could typically represent a saving of around £150 each month for those currently on a tracker mortgage, or for those considering a new mortgage deal, when compared to the start of 202,” he says.
“This, coupled with the fact that we have also witnessed the rate of inflation dip further only yesterday, should help create a strong platform for consumer confidence and affordability as we progress into the new year.
“In addition, there is real potential for lenders to support first-time buyers with more focused products to help uplift the market over the coming weeks and months.”
Iain McKenzie, CEO at The Guild of Property Professionals
“Today’s Bank Rate cut to 3.75% is a timely confidence boost for the housing market.
“With headline inflation easing to 3.2%, below expectations, this move brings borrowing costs to their lowest level in nearly three years and sends a clear signal that conditions are stabilising.
“For buyers and movers eyeing the New Year, it feels like an early Christmas present. We expect sentiment to continue to improve, supporting activity through the spring 2026 selling season, particularly as the Budget landed lighter than many feared.”
Lender
Marylen Edwards, Director of Mortgages at specialist lender MT Finance
“Today’s decision by the MPC to cut rates will be welcomed by borrowers. After interest rates were cut by the US Federal Reserve last week, it seemed inevitable that the Bank of England would follow suit, particularly after inflation fell in November.
“We are hopeful that this move will instil some confidence into the market, and we will start to see more landlords, as well as owner-occupiers, transact in the New Year.”
Broker
John Phillips, CEO at Just Mortgages and Spicerhaart
“The central bank has delivered a festive boost for borrowers, confirming a rate cut a week before Christmas.
“Given the timing, we may not see an instant reaction from potential buyers or movers, but combined with the positive news on inflation yesterday, it will certainly go a long way in boosting confidence and encouraging more clients to get their plans back on track.
“With Boxing Day always busy for property searches, we could certainly be in for a positive start to the new year,” he says
“Now is absolutely the time for brokers to be communicating these positive headlines to borrowers and reminding potential buyers and movers of everything the mortgage market has to offer – particularly recent activity from lenders on rates and criteria. While the signs look promising, a new year bounce is far from a given.”
Portals
Jason Tebb, President at OnTheMarket
“With inflation falling to 3.2 per cent in the year to November, this gave the rate setters the impetus they needed to cut rates for the sixth time in 17 months.
“This news will be welcomed by borrowers, particularly those due to remortgage in the coming year, who will be hoping that the rate shock will not quite be as exaggerated as it otherwise might have been.
“Previous rate reductions have been hugely welcomed by buyers and sellers alike, boosting confidence, easing affordability and giving much-needed impetus to the market, particularly since the stamp duty concession ended and the Budget did not offer anything to replace it,” he says.
“With the Budget now out of the way, the atmosphere of uncertainty has lifted and this rate cut delivers a real pre-Christmas boost for the housing market which bodes well for activity in the new year.”
Matt Smith, Mortgages Expert at Rightmove
“The financial markets and mortgage lenders have been expecting today’s Bank Rate cut for a while, and therefore responded early with mortgage rate cuts in December to round off the year.
“However, what will have more of an impact on the future direction of mortgage rates is the better than expected inflation figure reported earlier this week, which has improved the market’s forecast for next year.
“Don’t expect any big rate drops before Christmas while the property market is quieter, but it does mean we could now see a fresh round of rate cuts in the new year as lenders look to start the new year with a ban,” he says.
“Home-movers are likely to see the most notable rate drops for two-year fixed products rather than five, and next year we expect the gap between two-year and five-year deals to grow.”
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TagsAndrew Bailey Bank of England base rate reduction 18th Dec 20250 1,411 6 minutes read David Callaghan Share Facebook X LinkedIn Share via Email
