For some brokers, it's hugely encouraging – for others, the Bank should have been bolder
On a day which saw a US-UK trade deal, a new Pope elected and the 80th anniversary of VE day, the Bank of England’s announcement that it had reduced its base rate by 25 basis points from 4.5% to 4.25% risked being slightly eclipsed, but industry professionals have broadly welcomed the move – with some urging it to go further.
“We see this rate cut as a hugely encouraging step forward,” enthused broker Katrina Horstead (pictured left), co-founder and director of Versed. “Inflation appears to be heading in the right direction, and the Bank of England’s decision reinforces that confidence. More importantly, we’ve already seen several lenders reducing their mortgage rates over the past week, suggesting that the market had anticipated this move and is beginning to pass those benefits on to borrowers.
“For our clients, particularly those looking to remortgage or get on to the property ladder, this is welcome news. It’s not just about the base rate, it’s the momentum it creates. If the trend continues, it could significantly improve affordability over the coming months. While one cut isn’t a silver bullet, it’s a meaningful signal and combined with the early reaction from lenders, it gives us real optimism for the second half of the year.”
Joela Jenvey (pictured second from left), mortgage and protection adviser at Nurture FS welcomes the rate cut as a boost for borrowers and a much-needed signal of confidence for the housing market. “While the split vote shows ongoing caution, the direction of travel is clear,” Jenvey said. “For brokers, this move reignites activity just as buyers face increased upfront costs following April’s Stamp Duty threshold changes. We’re seeing more clients actively reviewing their mortgage options, especially those looking to remortgage early and secure more competitive deals. This environment allows us to offer real value, guiding clients through the months ahead of their product end dates, embedding trust, and building strong, long-term relationships. Happy clients become returning clients, and referrers.”
If lower rates are sustained, Jenvey suggests, we can expect to see an easing of swap rate pressure, improved fixed-rate pricing, and a market that offers brokers and borrowers more room to plan, act and grow with confidence. “Lenders historically look for market share, as traditionally activity slows from July to mid-September, meaning competitive pricing on product rates and some seasonal summer sizzlers,” she added. “Momentum is returning - let’s help our clients make the most of it.”
Meanwhile, David Hollingworth (pictured second from right), associate director of L&C Mortgages, is unsurprised to see a base rate cut, bringing it back to a level not seen since March 2023. “However, the decision was split three ways, with two members calling for a deeper cut and two preferring to see the base rate maintained at 4.50%,” Hollingworth said. “A cut is good news for borrowers but that split highlights the level of uncertainty that remains. A gradual fall in base rate throughout this year was already expected but the recent turmoil in global markets has accelerated the forecast for those cuts. That has already resulted in cuts to fixed mortgage rates feeding through for borrowers. The lowest two- and five-year fixed rates are pretty much on par and sit comfortably below 4% now, a marked improvement on where rates sat only a matter of weeks ago. We’d hope to see lenders continue to make improvements, the base rate fall won’t necessarily result in major cuts.”
The decision to cut the base rate reflects a pragmatic response to the shifting economic landscape, according to Nicholas Mendes (pictured right), head of marketing at John Charcol. “There is little doubt that ongoing global uncertainty, particularly around trade, has started to weigh more heavily on the outlook,” Mendes observed. “With inflation coming down faster than expected and signs that the labour market is beginning to ease, there is a clear case for acting now rather than risking a more abrupt response later. For mortgage holders, this move brings some relief, particularly for those on tracker and variable-rate products, who should see an immediate reduction in monthly repayments. The cut will support sentiment in the housing market at a time when affordability has been stretched and buyer activity has slowed. It also gives lenders a bit more breathing room to remain competitive, which could help stimulate demand, especially among first-time buyers.”
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Reasons to be cheerful?
Despite inflation being likely to tick up again in the near term, the focus has now flipped to ensuring economic growth, according to Ben Thompson, deputy CEO of Mortgage Advice Bureau. “We now have real wage growth, lower mortgage rates, and a favourable rate outlook, plus a record high number of mortgage products overall,” Thompson said. “We’re even seeing some helpful lending for first-time buyers, and hopefully that continues to grow, enabling more renters to become homeowners. It feels as though we have a small tailwind for the first time in a long time, at least domestically. It does now feel like a good time to buy, and a better time to refinance for those that need to.”
Welcoming the move, John Phillips, CEO of Just Mortgages and Spicerhaart, suggests that what will be interesting is what happens next and whether this latest reduction opens the flood gates for further and more frequent cuts. “If not already, now is the time for brokers to mobilise, to get out into their local area to share this update,” Phillips said. “It’s so easy to get bogged down by the news right now, when in fact we can share something really positive with the many who have the appetite to buy, but need help navigating the market.”
Others seem less convinced… Mark Harris, chief executive of mortgage broker SPF Private Clients, believes the Bank of England missed an opportunity to be bold and cut by a half point to 4%. “This would have sent out a strong message, helping boost the housing market and wider economy, particularly as the Stamp Duty concession has now ended,” Harris said. “Swap rates continue on a downwards path with lenders reducing mortgage rates in recent weeks and a plethora of sub-4% deals now available. What can’t be guaranteed is where rates end up, nor the pace it takes to get there."
For broker Luther Yeates, head of mortgages at Orton Financial, the Bank of England has once again demonstrated its failure to accurately assess the economy. “Inflation is expected to rise temporarily due to increasing utility prices,” Yeates said. “I would love to understand how maintaining a high base rate is supposed to reduce these supply-side inflationary pressures. Two members voted to hold rates at 4.50%. At what point should the Bank consider exercising its powers to remove MPC members who fail to fulfil their responsibilities?”
