Landlords taking out new mortgages or remortgaging their properties have reason to celebrate after the Bank of England’s Monetary Policy today agreed to reduce the bank’s base rate from 4% to 3.75%.

The base rate is the key interest rate set by the UK's central bank, influencing all other lending and savings rates. It has been held at 4% since August, when it reduced from 4.25%. The rate is announced eight times a year.

A reduction has been on the cards for some time after poor economic performance indicators in recent weeks including very weak growth, but also reducing inflation, making a rate cut inevitable.

Many lenders have already factored in the announcement into their interest rate offers to home owners and landlords.

“Two year and five-year fixed rate mortgage pricing has already shifted in anticipation and tracker borrowers will also feel the benefit,” says Kevin Shaw, National Sales Managing Director and national estate agency LRG.

Announcing the decision at noon, the committee's chairman Andrew Bailey (pictured) said: "The key question for me now is the extent to which inflation settles at the 2% target in an enduring way.

"Slack has continued to accumulate in the economy. Unemployment, underemployment and flows from employment to unemployment have all risen. While I do not yet see conclusive evidence of a sharper downturn in the labour market, we should be vigilant."

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Nathan Emerson, CEO of Propertymark‍

“With inflation continuing to ease, there is growing optimism that the Bank of England will have the confidence to cut the base rate. Any reduction would provide a welcome boost to housing market confidence, improving affordability for buyers and offering relief to those approaching the end of fixed-rate mortgage deals," he says.

“Lower borrowing costs would help stimulate activity, encourage more first-time buyers to take their first step onto the property ladder, and give existing homeowners greater confidence to move.

“While caution remains important, a shift towards lower interest rates would send a positive signal for both the housing market and the wider economy as we head into 2026.”

Shaw adds: “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”.

Matt Smith, Rightmove’s mortgages expert

"The financial markets and mortgage lenders have been expecting today's Bank Rate cut for a while, and therefore responded early with mortgage rate cuts in December to round off the year," he says.

"Bank Rate cut headlines are always positive for home-mover sentiment, even if this one has already been baked into mortgage rate cuts and won't drive further drops.

"However, what will have more of an impact on the future direction of mortgage rates is the better than expected inflation figure reported earlier this week, which has improved the market's forecast for next year. Don't expect any big rate drops before Christmas while the property market is quieter, but it does mean we could now see a fresh round of rate cuts in the new year as lenders look to start the new year with a bang.

Home-movers are likely to see the most notable rate drops for two-year fixed products rather than five, and next year we expect the gap between two-year and five-year deals to grow."

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