As widely expected, the Bank of England’s Monetary Policy Committee (MPC) announced yesterday (7 August 2025) that it has cut its Bank Rate from 4.25% to 4%.
It was a close thing – the move was approved by a 5-4 vote, following one MPC member, Alan Taylor, changing his vote from a half point to a quarter point.
This is the fifth Bank of England cut over the past year and brings the rate to its lowest since March 2023.
While the announcement is unlikely impact many existing mortgage holders – though variable-rate and interest-only borrowers will welcome the reduced rate – it will benefit first-time buyers and people looking to re-mortgage as their fixed-term period comes to an end.
It is hoped that a lower interest rate will instil more confidence in property buying and investing as well as boosting purchase transactions through reducing borrowing rates and monthly repayments to a more affordable level.
Experts across the property industry have commented on the announcement.
Kevin Shaw, national sales managing director, LRG: “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.
“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.
“[However], 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.”
Simon Gammon, managing partner, Knight Frank Finance: “Today’s rate cut sends a clear signal that the Bank of England is now more focused on slowing growth and rising unemployment rather than the threat posed by inflation. The split vote – with members supporting everything from a hold to a 50 basis point cut – underlines how finely balanced the decision was. But the direction of travel is clear. Borrowers now believe mortgage rates are more likely to fall than rise, and that’s lifting sentiment across the market. If current trends persist, we could see sub-3.5% mortgage rates by Christmas.”
Matt Thompson, head of sales at Chestertons: “Whilst the reduction might not meet expectations of house-hunters who have been hoping to see sub-4% rates this year, it will encourage many to go ahead with their property purchase. We have already seen a return in buyer confidence last month as more properties were put up for sale which created a larger selection of homes to choose from. Lower interest rates, even if reduced by just 0.25 percentage points, will only boost buyer motivation over the coming months.”
Jonathan Handford, managing director of Fine & Country: “Today’s decision by the Monetary Policy Committee to cut the base rate to 4% is the further shot in the arm that the property market has been waiting for. It’s not just the rate cuts themselves that help stimulate the market, but the economic tone they set. When reductions are seen as part of a stable recovery rather than a crisis response, they tend to stimulate real demand and drive up transactions. A softly-softly approach from the Bank of England could create the ideal conditions which translate as lower rates without runaway inflation, supporting a more balanced housing recovery across the regions.
“One interest rate shift doesn’t mean one reaction nationwide. We expect price movements to remain highly regionalised, especially where affordability remains stretched.”
Steph Walker, Co-founder of TAUK: “Lower borrowing costs may help some buyers back into the market, but bigger structural issues still need tackling. We urgently need to address obstacles holding back buyers and sellers. Stamp duty is one of the biggest barriers – it’s an expensive, upfront cost that holds families back, discourages downsizing, and punishes movers. Reforming it to something more flexible, like monthly payments, could help unlock housing chains and support a freer-flowing market.
“We also need to look at the buying and selling process itself, which too often feels fragmented, opaque, and stressful for the people going through it. For any real momentum to return, we need bold action – not just on interest rates, but on how to make moving home more accessible, less stressful, and better aligned with how people live today.”
Matt Smith, Rightmove’s mortgage expert: “Mortgage lenders have had a bit of room to reduce rates over the last week, owing to the ongoing developments around global tariffs. However, we expect that lenders will use the headline of today’s cut as the catalyst to reduce their rates a little further, though lender competition remains fierce and we don’t expect major rate drops. A combination of rate cuts and changes to buyer affordability criteria are helping many home-movers to responsibly borrow more towards the home that they want.
“The market expects there will be one more Bank Rate cut before the end of the year, with an outside chance of two. Any further cuts would likely see this cycle repeat again – with lenders using it as an opportunity to reduce rates a little more. It bodes well for the second half of this year, with further mortgage rate reductions and stable prices likely to encourage more activity.”
Nathan Emerson, CEO of Propertymark: “Throughout the world, many central banks have faced considerable pressure to reduce interest rates, and the UK has been no exception. So, this news is extremely positive and remains consistent with what has been widely hoped for. While this news will be very welcome for many buyers and sellers who may be empowered to potentially borrow more to finance their next house move, inflation is still above the Bank of England’s target rate of 2%.”
Iain McKenzie, CEO of The Guild of Property Professionals: “This cut will act as a catalyst for improving market sentiment and will further energise the growing pool of motivated buyers we’re seeing. Encouragingly, mortgage rates continue to trend downward supported by falling swap rates, which is helping to improve affordability and unlock demand, particularly among first-time buyers and those with larger deposits.
“We anticipate that this rate cut will continue to support buyer confidence and market momentum into the second half of the year. The alignment of slower house price growth, strong wage growth, and better mortgage availability is rebalancing affordability, especially in the more expensive southern regions, laying the groundwork for broader price stability.
“For those who have been watching from the sidelines, this could be the green light, and we could see a further uplift in buyer activity, transactions, and market confidence as we head towards the end of 2025.”
Read the orginal article: https://propertyindustryeye.com/industry-reaction-to-bank-of-england-interest-rate-announcement/
