Central bank expected to end the year with a cut
12:25 p.m.: Chancellor weighs in on rate cut
Rachel Reeves has commented on the Bank of England decision, describing it as "good news for families with mortgages and businesses with loans."
Today's interest rate cut is the sixth since the election, the fastest pace of cuts in 17 years and good news for families with mortgages and businesses with loans.
— Rachel Reeves (@RachelReevesMP) December 18, 2025
There's more to do on the cost of living, that's why we're cutting £150 off energy bills and freezing rail fares.
12:22 p.m.: Read our full report on the BoE decision
Here's Rommel Lontayao on today's rate cut:
12:17 p.m.: Bank says further cuts are likely
The Bank of England’s statement announcing its latest cut contains some noteworthy insights into the decision. Among those:
- It might not be done with rate cuts yet. “On the basis of the current evidence, Bank Rate is likely to continue on a gradual downward path,” the Bank said. “But judgements around further policy easing will become a closer call.”
- Inflation risks are easing. The Bank said the risk from greater inflation persistence “has become somewhat less pronounced since the previous meeting” although weaker demand is continuing to pose a risk to medium-term inflation.
- The jobs outlook and wider economy remain significant concerns for the Bank. “Households and businesses could remain cautious about their spending and investment decisions,” it said, “and the labour market could weaken significantly further. But of these could lead to inflation falling below target in the medium term.”
- Members are divided on the main risks to inflation. Some viewed risks falling since Chancellor Rachel Reeves unveiled her budget, but others flagged potentially elevated pay growth in 2026 as a concern. Andrew Bailey, Swati Dhingra, Sarah Breeden, Dave Ramsden, and Alan Taylor voted in favour of a 25-basis-point cut, while Megan Greene, Clare Lombardelli, Catherine Mann and Huw Pill voted for no change.
12:07 p.m.: A close vote among decisionmakers
The Monetary Policy Committee voted by a majority of 5-4 to cut interest rates to 3.75%.
— Bank of England (@bankofengland) December 18, 2025
Find out more: https://t.co/GHHt7QdrbF pic.twitter.com/CmK1476vYM
12:05 p.m.: Mortgage industry reaction pours in
Mortgage professionals are giving a thumbs-up to the BoE decision, even if plenty are cautioning that the rate cut might not move the needle much for the mortgage market in the short term.
While there will be an “immediate positive impact” to trackers and variables, that likely won’t be the case for other mortgage types.
“An immediate cut to fixed rates isn’t a given, as was highlighted on November 24 when the BoE cut rates but fixed rates increased generally across the board due to persistent inflation concerns,” The Mortgage Station mortgage and protection advisor David Titherington said.
“I think we’re in a slightly better place this time around, though, and I’d have thought fixed rates may slowly decrease by a small amount.”
And Matthew Arena, MD at Brilliant Group, highlighted that markets and lenders had already priced in a 25-basis point cut – meaning the immediate impact on product pricing will be “modest.”
But he still said it was a positive step. “It sends signals to borrowers that rates have peaked and should increase borrower confidence,” he said. “The sub-4% rates will also be a psychological boost across the sector.”
12:00 p.m.: BREAKING – Bank of England cuts rates
Well, there it is – as expected, the Bank of England has lowered its bank rate by 0.25%, bringing the trendsetting rate to 3.75% in its final decision of the year.
That widely anticipated announcement is a welcome one for the mortgage market, moving borrowing costs lower for scores of homeowners and hopeful buyers with 2026 approaching.
11:50 a.m.: BoE announcement almost here
The Bank is scheduled to release its decision on interest rates in 10 minutes, at 12:00 p.m. GMT. To recap: markets are expecting a cut, and watching for clues on potential further rate reductions in the months ahead.
Stay tuned – we'll have all the updates here.
11:45 a.m.: How a cut could affect mortgages
For borrowers on tracker mortgages, a drop in the BoE base rate usually means monthly payments are also on the way down. Homeowners with a standard variable rate (SVR) would probably also see rates fall, although lenders aren’t obliged to move their SVR in line with base rate changes or at all.
For fixed-rate mortgage holders, there’s no immediate change until the fix ends, with monthly payments normally unaffected by a base rate move until the fixed term expires.
But when those borrowers remortgage, the new rates available will reflect the new base rate as well as market expectations of future rates.
And on interest-only mortgages, payment changes track the rate move exactly – while repayment (capital-and-interest) borrowers will see the change slightly softened in monthly-payment terms, although it’s still material on larger loans.
11:30 a.m.: Markets keeping a close watch for 2026 clues
As mentioned, a 25-point cut is widely expected – and anything else would come as a shock to financial markets, even though some Bank decisionmakers are still sceptical about the need to bring rates lower.
Perhaps of more interest to market watchers will be whether the central bank gives any indication of its plans for 2026 and potential further cuts next year.
Deutsche Bank economist Sanjay Raja told Yahoo! Finance that Bank governor Andrew Bailey was likely to cast a decisive vote in favour of a cut today – and said he sees two 2026 cuts, in March and June. That would move the benchmark rate to 3.25% by the middle of next year.
11:15 a.m.: Get up to speed with all our BoE coverage
Just 45 minutes to go until the Bank makes its rate decision public – and while you’re waiting, why not check out all our coverage previewing the announcement?
First, here’s Mahee Mustafa’s interview with economist James Bennett (Fitch Solutions) on why a cut by the central bank would be a “gradual easing” rather than a full pivot in its approach.
Meanwhile, Rommel Lontayao rounds up how experts are expecting the Bank’s announcement to go, with housing and mortgage executives hopeful of a boost to the sales outlook if rates move lower.
With the Bank of England due to announce its latest decision on Thursday, industry figures are increasingly expecting another cut in the base rate and a further easing in mortgage costs. https://t.co/Uidx0qdOh8
— Mortgage Introducer (@MortgageChat) December 18, 2025
And Bryony Garlick has more from brokers on what they’re looking out for as the BoE’s last decision of the year looms into view.
11:06 a.m.: 2025 BoE recap
A rate cut by the BoE this afternoon would mark its fourth reduction of 2025 and bring that trendsetting rate a full percentage point lower from where it started the year.
So far, the Bank has introduced three 25-basis-point cuts, in February, May, and August, after making two reductions in 2024.
At 4%, the official bank rate is still much higher than where it sat during and in the years prior to the COVID-19 pandemic, when it didn’t rise above 0.75%.
11:03 a.m.: Here's how the Bank of England rate has changed in recent years
Source: Bank of England
11:00 a.m.: What would a cut mean for the housing and mortgage markets?
A BoE reduction today would lower the central bank rate to 3.75% and potentially bring further relief to homebuyers weighing up a move.
Nick Leeming, chairman at national estate agency Jackson-Stops, believes a cut would mark a welcome step for the housing and mortgage markets.
That move, he said, would “fuel competitive mortgage offers, giving some more leverage and impetus to make [a] move in January.”
He said it would help the housing market build on a recent jump in momentum. “Already in the first few weeks of December, we have seen a sharp uptick in offers and exchanges,” he said, “with a continued surge in activity expected in the first quarter of the year.”
10:50 a.m.: Markets confident of a cut
There’s plenty of intrigue around today’s decision – but there seems little doubt in the eyes of traders about the outcome of the BoE announcement.
Financial markets already overwhelmingly anticipated a 0.25% reduction by the Bank, and yesterday’s news of a drop in inflation only strengthened those expectations.
The consumer price index (CPI) slipped to 3.2% last month, while unemployment is also on the rise – hitting its highest level since the COVID-19 pandemic, strengthening the case for a lower central bank rate.
Mortgage and housing market professionals are also increasingly confident a 25-basis-point cut is on the way.
Amy Reynolds, head of sales at estate agency Antony Roberts, said that move looks “almost nailed on” and that another cut could also be on the way in early 2026.
10:40 a.m.: A big day for the mortgage market
Hello and welcome to our live updates from one of the biggest days for the UK mortgage market this year: the Bank of England’s final scheduled interest rate decision of 2025, one that could have big implications for homeowners and buyers.
The central bank will deliver that announcement at 12:00 p.m., and the consensus among financial markets and BoE watchers seems to be that anything other than a 25-basis-point cut would be a huge surprise.
We’ll keep you posted throughout the morning and early afternoon as the mortgage market anxiously awaits a possible early Christmas present from the Bank. Stay tuned!
