The Bank of England has cut interest rates by 0.25 percentage points to 4.5%, raising hopes of better mortgage deals for landlords.

Its Monetary Policy Committee voted to reduce the rate to the lowest level since June 2023. However, two members wanted to cut it by 0.5 percentage points - a sign that more reductions could follow.

Oxford Economics continues to forecast a further three cuts in 2025, bringing the base rate to 3.75% by the end of the year. The bank’s next decision will come on 20th March.

Agents and brokers suggest the announcement may prompt the introduction of new and improved mortgage products over the coming weeks.

Experts react

Henry Knight, managing director at Springtide Capital Mortgage Brokers, says expectations of lower rates throughout 2025/26 are predicted, with better deals emerging for new borrowers and those looking to remortgage.

“It is important to remember that mortgage rates are influenced by a variety of factors beyond the BoE base rate, so a drop in the bank rate does not necessarily result in an immediate reduction in mortgage rates across the board,” explains Knight.

“When setting their rates, lenders take multiple elements into account, including their service levels, swap rates, and overall market conditions.”

Daniel Austin, CEO and co-founder at ASK Partners, adds that while the Bank’s move may provide some relief for borrowers, the broader impact will depend on how quickly lenders adjust mortgage rates and how sustained the rate-cutting cycle becomes.
“For homeowners and prospective buyers, lower rates should, in theory, make mortgages more affordable,” says Austin. “However, the current market dynamics, where fixed mortgage rates have remained elevated despite previous signs of easing, suggest that any immediate impact may be muted.”

Nathan Emerson (pictiured), CEO of Propertymark, says: “Despite widespread uncertainty and the Bank of England expecting inflation rates to increase to 2.8% by the third quarter of 2025 before easing again, today’s announcement comes as welcome news for many.

“It’s now likely that mortgage borrowing takes the same path and dips slightly which will, in turn,help ease the strain on people’s finances and improve their chances of homeownership.

"This extra boost in affordability and confidence is needed, and we look forward to hopefully seeing new and improved mortgage products enterthe market over the coming weeks.”

Jason Tebb (pictiured), President of OnThe Market, says “As expected, the Bank of England has reduced interest rates by a quarter point to 4.5 per cent. 

"With inflation falling in December, indicating that it is seemingly under control even if still above the 2 per centtarget, the ratesetters had no real reason to hold rates again.

"A reduction in interest rates sends an important message to buyers and sellers, enabling them to plan ahead with more confidence. It should ease affordability and boost the housing market, as the two rate reductions in the second half of 2024 did, leading to an improvement in activity and transaction levels. 

"With the stamp duty concession ending in March, expected further rate reductions should give the market added momentum as the year progresses.”