Bank interest rates: Bank of England rate cut will ‘fuel momentum’ in property market, say experts

The Bank of England has cut interest rates to 4% on Thursday (August 7), marking the lowest level for more than two years. In a tight decision, rate-setters at the bank opted to cut rates for the third time this year.

In expectation of the Bank of England lowering its base rate, which helps dictate how expensive it is to take out a mortgage or a loan, many lenders have been chopping rates in recent months, including several offering deals at sub-4% levels.

Experts said this could be good news for people with a fixed-rate mortgage who are coming to the end of their term, because rates have been falling relative to where they were last year. The average homeowner on a tracker mortgage will see nearly £29 shaved off their monthly payments, industry data showed after the decision.

"We’ve already seen significant strength return to the mortgage sector since interest rates began to stabilise and trend downwards,” Stephanie Daley, Director of Partnerships at mortgage advisor Alexander Hall, said. “Today’s decision to further reduce the base rate will only serve to fuel this momentum, easing the cost of borrowing for the nation’s homebuyers even further.”

And that’s not the only good news for those looking to get on the property ladder. Stephanie said: “This welcome boost comes in addition to the recent decision to make the Mortgage Guarantee Scheme permanent, alongside the loosening of income lending restrictions, both of which have already had a positive impact on mortgage affordability.

“As we move into the second half of the year, this positive shift in the mortgage landscape is expected to support sustained demand and contribute to the long-term resilience of the market.”

CEO of estate agency brand Foxtons, Guy Gittins, agreed. “Today’s decision to cut the base rate is a welcome development for the property market and one that should continue to support year on year growth, as we saw in the first half of 2025,” Guy said.

“This interest rate reduction, along with improving mortgage affordability and changing lending criteria from the new mortgage guarantee scheme, all provide further reassurance and stability for buyers and investors. As we move into the second half of the year, our outlook remains cautiously positive given the continued appetite for vendors to bring great property to the market, while taking into consideration wider macro-economic factors.”

Another financial expert, CEO of Octane Capital, Jonathan Samuels, agrees this is a positive move for the property market, offering a “much needed boost”. He said: “The Bank of England’s decision to cut the base rate today is a welcomed move, offering a much-needed boost to the property market and building on the momentum seen over the last 12 months.

“While inflation remains a concern, we’ve already seen many lenders acting in anticipation of today’s cut and the resulting reduction in borrowing costs will provide immediate relief, not just to the nation’s homebuyers, but also to those within the industry looking to utilise specialist lending products.

“A rate cut will further encourage developers to push forward with projects and bring much needed housing stock to the market and specialist lending plays a crucial role here, by offering flexible and accessible financing. As we move into the second half of the year, the combination of lower borrowing costs and the support from specialist lenders will be key in driving continued growth in the property sector."

However, Thomas Cantor, Co-Head of Short-Term Finance at West One Loans, advises people not to expect huge changes in lenders rates as the predicted interest rate cut has already been factored in by many. “While the Bank of England’s decision to cut the base rate today is a positive move for the property market, it’s important to note that this move has already been largely priced in by lenders,” he said.

“The expectation of a rate cut has been building for some time, however, it will continue to support market confidence and allow developers to move forward with critical housing projects. Specialist finance will continue to play a key role in ensuring projects are funded and completed, contributing to the ongoing stability and growth of the property sector.”

The MPC will hold three more meetings this year when policy makers will be able to vote on interest rates. Bank of England governor Andrew Bailey said on Thursday that interest rates are still “on a downward path”, pointing towards further reductions.

The Bank’s report also indicated that it currently assumes that interest rates will drop to 3.5% next year. Nevertheless, Mr Bailey said at the Bank’s press conference that the direction of interest rates is still “uncertain”.