Base Rate Cut to 4.25%: What It Means for Homebuyers in 2025
The Bank of England has cut the Base Rate to 4.25% it’s second interest rate reduction this year. For homebuyers in 2025, this shift could mean a more affordable and accessible property market, especially for those looking to buy a new build home.
Lower Interest Rates Will Make Borrowing More Affordable
With UK inflation currently at 2.6%, slightly above the Bank of England’s 2% target, this Base Rate cut is aimed at supporting economic growth without letting inflation rise unchecked, boosting consumer spending and increasing access to lending.
How Does The Interest Rate Cut Affect Mortgage Rates?
Mortgage rates have already been gradually decreasing, and this latest cut could accelerate that trend. Here's what it could mean for you:
- Fixed-rate mortgage deals particularly 2 and 5 year terms may become cheaper as lenders adjust to the new Base Rate.
- Tracker mortgages or variable-rate mortgages linked to the Base Rate could see monthly repayments decrease.
- For homeowners approaching the end of a fixed-rate deal, this could be an ideal time to remortgage at a lower rate before reverting to a higher Standard Variable Rate (SVR)—currently averaging 7.5%.
What Does This Mean For First-Time Buyers and Movers?
- Improved mortgage affordability: Lower SVRs may enhance your chances of being approved, thanks to more favourable affordability checks.
- Easier access to finance: As interest rates fall, monthly repayments on mortgages may drop, freeing up budget for other costs like deposits or moving fees.
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