At last!! May’s latest cut to the base rate was welcome news from the Bank of England’s Monetary Policy Committee. Now standing at 4.25%, the base rate decrease brings hope of further cuts to mortgage rates and greater affordability for London buyers and landlords eager to buy in the capital. And the cuts won’t be the last of 2025.
Conservative estimates suggest three more rate cuts before the year-end, which means we could see a base rate of 3.5% as we move into 2026. Meanwhile, the more optimistic predict the MPC might throw in an extra cut and take the rate closer to 3%.
In the voting for the most recent cut, two of the nine-member committee voted for a stronger decrease of 0.5 percentage points, suggesting that they, like most of the UK, also want more aggressive action.
However, two voted for no cut at all. This shows the wide range of opinion within the committee itself – let alone the wider country. It was hoped that we might have a clearer forecast of future decreases, but in summing up its decision and looking to later in the year, the MPC once again warned that it will continue its “gradual and careful” approach to additional cuts and that its monetary policy wasn’t on a ‘pre-set path’. In other words, they aren’t about to get carried away and are desperate to keep inflation low and still boost economic growth.
Bringing hope
But let’s not distract from the good news here. The path of further cuts may be a little unpredictable, but they should happen even if the MPC isn’t committing to any real forecasts of when. We see that the London market is already thriving and hopefully this should be a further boost. At Living in London, we’ve had a phenomenal first quarter, with a record number of properties coming to market and completing. Much of this was ahead of the change in stamp duty thresholds as buyers looked to complete before increased costs came in.
They continue to look for opportunities, with demand in the capital high in part driven by the continued return to offices for many London-based firms where remote working had previously become the norm.
Cost is an issue, simply because prices are so much higher in London and are continuing to rise, especially with that increase in demand. Mortgage affordability is crucial for buyers in the capital and the return of sub-4% mortgage rate deals in the week or so before the base rate cut announcement was welcomed by all. Lenders rushed to make cuts both before and after the new rate was revealed and it’s hoped that they will continue to do so.
Lower mortgage rates increase confidence and ability to buy and should prove a further stimulus to a market that has been simmering for some time. Buyers’ moods have been boosted – we just hope that the next meetings of the MPC continue to bring good news and that the boost is maintained.
If you’re considering selling in 2025, now is the time to start planning. Get in touch with our award-winning team for expert advice on how to make the most of the opportunities ahead!
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