The Bank of England’s Monetary Policy Committee (MPC) has announced its latest base rate decision.
As widely anticipated, it has cut the rate by 0.25% from 4% to 3.75%.
There’s been a supportive reaction from players in the housing market.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The encouraging news is that the housing market has been relatively resilient despite many concerns about the contents of the Budget, which turned out not to be as bad as anticipated. We don’t expect fireworks after the new year but now interest rates are a little lower, we do expect a gradual improvement with property price increases tempered by continuing concerns about the economy and the amount of choice available.
“Many of our customers have been sitting on their hands, not knowing which way to turn but they haven’t withdrawn from the market altogether. Many are now saying since the Budget – ‘why not?’ rather than ‘why?’, which is what they were saying previously.”
Paul Hardy, managing director at LSL Estate Agency Franchising says: “Today’s cut to 3.75% is a welcome boost after the slowdown leading up to the Budget. Dropping below 4% is psychologically significant for buyers and sellers, restoring confidence after a cautious few months.
“While it won’t transform conditions overnight, it signals improving stability, and we expect lenders to respond with sharper products, setting the stage for renewed market activity heading into 2026.”
And Kevin Shaw, national sales director at LRG, comments: “This warming news is set against a chilly backdrop: unemployment has increased to 5.1%, while the November Budget tightened the fiscal screws. Inflation, however, has eased to 3.2% and, thanks to today’s cut, looks likely to continue on that trajectory.
“With a reduction in interest rates we expect an increase in activity and therefore transactions. Across LRG brands, applicant numbers are already up 15% year-on-year in December and we’re seeing a significant number of vendors ready to launch in early January.”
This is how Lucian Cook, head of residential research at Savills, has reacted: “It does feel as if this long-awaited rate cut is already “baked-in” to fixed-term rates, and an underlying sense of caution among buyers will override any potential stimulus to house prices in the short term.
“Looking ahead to 2026, we expect house price growth to remain in low single-digit territory, despite improving affordability. While interest rates are expected to continue to edge down, weak economic growth is likely to act as a drag on buyer confidence, with a weak labour market limiting the capacity for growth. Our mainstream house price forecast expects average house prices to increase by 2% in 2026 or £7,200, in what is expected to be a bottom-up rather than a top-down recovery.
“Typically, the prime market leads a rebound, but the opposite is true in the current environment as it will take some time for the top-end of the market to fully absorb tax changes, with moderate falls expected to continue in the New Year.”
Meanwhile Nathan Emerson, CEO of Propertymark, comments: “Although mortgage agreements vary, today’s news could typically represent a saving of around £150 each month for those currently on a tracker mortgage, or for those considering a new mortgage deal, when compared to the start of 2025.
“This, coupled with the fact that we have also witnessed the rate of inflation dip further only yesterday, should help create a strong platform for consumer confidence and affordability as we progress into the new year. In addition, there is real potential for lenders to support first-time buyers with more focused products to help uplift the market over the coming weeks and months.”
This article is taken from Landlord Today