The base interest rate used to calculate variable landlord mortgage premiums has been cut by 0.25% following a meeting of the Bank of England’s Monetary Policy Committee (main image).
The group of nine financial figures has decided to take the ‘breaks off the economy’ which it has described has sluggish at best, despite worries about continuing inflation, which has yet to reduce down from its current 3.6% to the committee's desired 2%.
They voted five against four in favour of the cut, saying that cutting the Bank Rate to 4% would help an economy that has seen growth “subdued, consistent with a continued, gradual loosening of the labour market”.
“A margin of slack is judged to have emerged in the economy. Downside domestic and geopolitical risks around economic activity remain, although trade policy uncertainty has diminished somewhat.
“A gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate. The restrictiveness of monetary policy has fallen as Bank Rate has been reduced.
“The timing and pace of future reductions in the restrictiveness of policy will depend on the extent to which underlying disinflationary pressures continue to ease. Monetary policy is not on a pre-set path, and the Committee will remain responsive to the accumulation of evidence.”
Its next decision will be on the 18th of September.
Matt Smith, Rightmove's mortgage expert
“As expected we now have the third Bank Rate cut of the year, with the Bank continuing along its forecast trajectory. Mortgage lenders have had a bit of room to reduce rates over the last week, owing to the ongoing developments around global tariffs. However, we expect that lenders will use the headline of today's cut as the catalyst to reduce their rates a little further, though lender competition remains fierce and we don't expect major rate drops.
"Lenders have been competing for business in a market which has the largest supply of homes for sale in a decade. A combination of rate cuts and changes to buyer affordability criteria are helping many home-movers to responsibly borrow more towards the home that they want.
"The market expects there will be one more Bank Rate cut before the end of the year, with an outside chance of two. Any further cuts would likely see this cycle repeat again - with lenders using it as an opportunity to reduce rates a little more. It bodes well for the second half of this year, with further mortgage rate reductions and stable prices likely to encourage more activity."
Gareth Lewis, deputy CEO at specialist lender MT Finance
"The MPC’s decision to reduce the base rate is a direct response to persistent economic headwinds, including the impact of unemployment, tariffs, and lingering inflationary pressures.
“This move is intended as a stabilising influence, offering a much-needed buffer against a volatile environment. While it does not signal an immediate return to robust economic positivity, it aims to prevent further downturns and provide a foundation for cautious growth.
“For property investors, this provides a clearer, albeit still uncertain, outlook on borrowing costs, which could encourage some new projects and acquisitions in a more stable, though still volatile, market.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman
"Anticipation of a cut in base rate has already applied downward pressure on mortgage payments and helped drive the increase in mortgage approvals announced at the end of last month.
“After weighing concerns about inflation with a need for growth, the Bank clearly decided it was safe to stimulate more activity. The housing market will play its part with a positive multiplier effect on other parts of the economy crucial to job and social mobility.
“The reduction will help to tip the buyer balance for some from ‘why?' to 'why not?’ and allow borrowers to plan ahead with more confidence to take on debt."
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts
“There’s a definite sense that everyone – buyers, sellers, and estate agents – has been waiting to see what happens with interest rates. The possibility of a reduction in mortgage costs is a frequent topic of conversation in our offices.
“This cut will give the market which experienced a brief lull in activity at the start of the school holidays but has since picked up significantly, a further boost. Serious buyers are committing and keen to move before the end of the year."
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