The Bank of England has reduced the official interest rate to 4%. Here’s what that means for buyers, sellers and anyone thinking about their next move.
What has happened to interest rates?
At its latest meeting, the Bank of England cut the Bank Rate to 4%, the lowest level since early 2023.
The move has raised eyebrows among some economists. Inflation is currently forecast to rise to around 4% next month – double the Bank’s target of 2% – and interest rate cuts usually happen when inflation is falling, not rising.
Will rates fall any further?
Governor Andrew Bailey has hinted that any future changes will be slow and steady.
He said: “It remains important that we do not cut Bank Rate too quickly, or by too much.” He added that monetary policy is “not on a pre-set path,” suggesting a cautious approach for the rest of the year.
Analysts are divided on whether we’ll see more cuts in 2025.
Is now a good time to move?
For homebuyers, the rate cut is broadly good news. Many lenders had already begun lowering their mortgage rates in anticipation of the decision.
(Keep in mind that mortgage rates set by lenders don’t always move in exact step with the Bank Rate.)
However, there’s another factor to consider. As mortgage costs fall, more buyers may re-enter the market. Increased demand can lead to faster sales and, in some cases, rising prices.
According to the Halifax House Price Index, there’s often a clear link between improving affordability and price growth.*
So while cheaper borrowing can help, any savings on mortgage repayments could be offset if prices climb.
What should you do now?
If you’ve been considering moving, this could be a good moment to explore your options.
Take a look at what’s currently available to buy.
If you’re selling, get your home valued to understand where it sits in the current market.
Review your finances, set a realistic budget, and speak to a mortgage advisor to find the best deal for your circumstances.
Then decide whether now feels like the right time to take the next step.
If you’re looking for a property to buy, get in touch to see what we have available. And if you’re thinking of selling, we’d be happy to provide an up-to-date valuation and marketing advice.
*Source: Halifax HPI, 7 August 2025
Article by Andrew Overman | Partner | Location Location East
