The Bank of England has cut the base rate below 4% for the first time since early 2023, a move that had been widely expected after further signs that inflation is easing. Coming shortly after the November Budget, the decision adds to the sense that conditions for borrowers are finally starting to improve. Mortgage pricing had already begun to shift in anticipation, with fixed rates edging down and tracker borrowers seeing an immediate benefit.
While this cut alone won’t transform the market overnight, it does feel like an important turning point. Mortgage and property experts are telling us what they think about this announcement:
Steve Cox, Chief Commercial Office at buy-to-let lender, Fleet Mortgages:
“The Bank’s decision to cut Bank Base Rate today will come as little surprise given recent market sentiment and the broader economic signals pointing in this direction. In many ways, a number of lenders have been ahead of this particular curve having been actively pricing it into products. We’ve seen a flurry of mortgage rate cuts across the residential and buy-to-let sectors over the last week or so, perhaps in anticipation of this decision and in an attempt to grow volume and pipeline as we move into 2026. In the buy-to-let space, product pricing continues to improve, supported not just by this rate change, but by swaps which are increasingly aligned with the view that further cuts could follow into 2026.
For landlords, this is a positive way to end the year and a promising start to 2026. With greater certainty following the Autumn Statement – including clarity on tax changes that won’t bite until April 2027 — and with the Renters’ Rights Act coming into force next year, any opportunity to reduce monthly mortgage costs will be welcomed. Landlords coming to the end of two-year deals in particular will find a much more competitive rate environment than they did in 2023 or early 2024, and this should support renewed purchase and refinance activity in the months ahead.”
Ben Thompson, Deputy CEO, Mortgage Advice Bureau:
“The much-anticipated final base rate cut of the year is the strongest signal yet that the government’s commitment to taming inflation and stabilising the economy is paying off. This latest move from the Bank of England – in addition to yesterday’s news that inflation has fallen to 3.2% – should give us all a much-needed boost of confidence to plan for the year ahead.
Whether you’ve been eyeing up your first home or are desperate to move up the ladder, there’s a high chance you’ve been stuck watching from the sidelines, waiting for rates to settle down. However, the market has already priced in this stability, and mortgage rates have already been on a gradual downward trend over recent months.
If you’ve been thinking homeownership is out of reach, think again. There’s a broad range of options out there to give you a helping hand, and an expert mortgage adviser can cut through the noise and find the right deal for your circumstances. Working in your corner, they can help you get onto the property ladder sooner than you think, so you can start 2026 exactly as you mean to go on.”
Richard Pike, chief sales and marketing officer at Phoebus Software, to today’s base rate reduction to 3.75%:
“The Bank of England has delivered an early Christmas present for homeowners with its decision to cut the base rate, the fourth reduction this year. The decision was widely expected, particularly considering yesterday’s fall in inflation, and we’ve seen mortgage rates reduce in the past few weeks in anticipation of the announcement. This will help alleviate affordability pressures for households and unlock greater borrowing potential and support increased mortgage activity – providing a much-needed boost for the market.
The base rate is now at its lowest level since early 2023, and we can expect to see the rate continue downwards throughout 2026 as price pressures continue to ease, although the Bank will continue to adopt a careful and gradual approach in the light of continuing economic pressures.”
Charles Resnick, Chief Finance Officer at Afin Bank, commented:
“The Bank of England is walking a bit of a tightrope at the moment, balancing its aim of returning inflation sustainably to its 2% target, below the current rate of 3.6%, while being cautious not to ease policy too quickly while domestic cost pressures persist.
Although today’s cut to the Base Rate was not a surprise, it could easily have gone the other way with interest rates left unchanged. You only have to look at the last MPC meeting in November, when the vote was 5-4 in favour of keeping the rate flat, to see there is a difference of opinion within the committee. The minutes from today’s meeting will be interesting.
Mortgage lenders are expected to remain disciplined, reflecting ongoing uncertainty around the pace of further cuts given the MPC’s emphasis on a cautious, data-dependent easing cycle.”
Nick Leeming, Chairman of Jackson-Stops, comments:
“Today’s news is a shot in the arm for the housing market just as we enter peak property browsing season over the Christmas break. Lower borrowing costs is a key driver of renewed buyer confidence. Unlocking more competitive pricing should lower monthly repayments for homeowners on variable or tracker mortgages, improve affordability at the low to mid-end, and stimulate buyer activity. We expect to see a gradual increase in buyer enquiries, improved sentiment, and a more balanced market, with the potential to encourage discretionary movers and international buyers back into the market. While broader economic factors such as employment trends and wage growth still influence buyer behaviour, ultimately, lower borrowing costs will make moving home more financially feasible.
“The sprinkle of good news for the housing market has come at a much-needed time after a market freeze in the run-up to the Budget. Whilst the consequences of the resulting mansion tax have yet to be determined, many are now breathing a sigh of relief with certainty in the air and added economic confidence from falling interest rates. The resilience of the housing market over the past few months points to an expected period of long-term stability.”
Adrian MacDiarmid, head of mortgages at Barratt Redrow, said:
“Today’s interest rate cut is good news and an early Christmas present for first-time buyers and the wider housing market. In advance of the FCA’s new modernised lending rules, we have seen many lenders improve affordability assessments, making it easier for more prospective homeowners to bring forward their dream of homeownership.”
Ryan McGrath, Director of Second Charge Mortgages at Pepper Money, comments:
“Today’s decision by the Bank of England to cut the base rate marks an important shift in momentum and will be welcomed by borrowers who have been navigating sustained financial pressure over the past two years. While the reduction itself may be modest, it reinforces growing confidence that borrowing conditions are beginning to ease.
While a 0.25% reduction provides immediate relief to those on tracker mortgages, the lending environment remains complex. Many homeowners are still locked into low fixed-rate deals secured years ago, meaning a full remortgage could still result in a payment shock.
Against this backdrop, the case for second charge lending continues to strengthen. Secured loans allow homeowners to access equity for home improvements or debt consolidation while keeping their existing mortgage rate intact. As the market adjusts to a lower-rate environment, flexibility and rate preservation will remain key considerations for households reassessing their finances.”
Nick Hale, CEO at Movera, on today’s base rate reduction to 3.75%:
“The decision to cut the base rate has been widely anticipated and will provide a shot in the arm for the housing market. We’re already seeing lenders reducing their rates, increasing affordability for borrowers, and I expect this to be the springboard for a busy 2026 in the mortgage market. Despite the challenging economic environment, buyer demand remains high and this will also stimulate the remortgage market.
With transactions on the rise, our job is to make sure that we’re ready to continue to support home movers and our partners with digitally transformed and streamlined case progression, where service quality with a personal touch is key – in a market that’s gearing up for growth.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said:
“The central bank has delivered a festive boost for borrowers, confirming a rate cut a week before Christmas. Given the timing, we may not see an instant reaction from potential buyers or movers, but combined with the positive news on inflation yesterday, it will certainly go a long way in boosting confidence and encouraging more clients to get their plans back on track. With Boxing Day always busy for property searches, we could certainly be in for a positive start to the new year.
Now is absolutely the time for brokers to be communicating these positive headlines to borrowers and reminding potential buyers and movers of everything the mortgage market has to offer – particularly recent activity from lenders on rates and criteria. While the signs look promising, a new year bounce is far from a given. We have to play our part in achieving this by educating clients, nurturing confidence and facilitating transactions.”
Tony Hall, Head of Business Development at Saffron for Intermediaries has today responded to the latest BoE interest rate decision:
“This marks the first base rate cut since August and brings borrowing costs down to their lowest level in three years. While the Autumn Budget introduced a degree of uncertainty, inflation is easing, even if it remains above the Bank of England’s 2% target.
Looking beyond Christmas and into 2026, a base rate below 4% should provide welcome momentum for confidence and activity across the housing market. As these changes begin to feed through, it remains crucial for buyers and movers to speak to an adviser to understand how the evolving landscape may affect their options.”
Joe Pepper, UK Chief Executive Officer, PEXA, said:
“The Bank of England’s decision to reduce the base rate signals promising potential for growth in the UK property sector. It’ll be a welcome early Christmas present for those waiting for a reduction in borrowing costs to secure a mortgage or those looking to remortgage as they approach the end of their fixed term.
But despite the benefit of decreasing borrowing costs and declining asking prices to prospective homeowners, the resulting uptick in home buying activity will undoubtedly add significant pressure on conveyancers and lenders, increasing the risk of delays across the transaction chain.
This will come to a head in January, a time in which conveyancers already see an uptick in instructions. It will simply pour petrol on the fire, and the back-end infrastructure that supports conveyancers will implode. We must take collective and collaborative action to prevent this, addressing current weaknesses in the system if we have any hope of meaningful change and delivering certain and secure transactions for all.”
Matthew Thompson, head of sales at Chestertons, says:
“Many house hunters use December to review their finances, so a rate cut is well-timed. Alongside easing mortgage rates, it should help underpin buyer confidence and support activity as the market moves into 2026.”
John Phillips, CEO of Just Mortgages and Spicerhaart, said:
“The central bank has delivered a festive boost for borrowers, confirming a rate cut a week before Christmas. Given the timing, we may not see an instant reaction from potential buyers or movers, but combined with the positive news on inflation yesterday, it will certainly go a long way in boosting confidence and encouraging more clients to get their plans back on track. With Boxing Day always busy for property searches, we could certainly be in for a positive start to the new year.
Now is absolutely the time for brokers to be communicating these positive headlines to borrowers and reminding potential buyers and movers of everything the mortgage market has to offer – particularly recent activity from lenders on rates and criteria. While the signs look promising, a new year bounce is far from a given. We have to play our part in achieving this by educating clients, nurturing confidence and facilitating transactions.”
Matt Smith, Rightmove’s mortgages expert, says:
“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. 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.”
Sarah Thompson, Group Financial Services Director, Mortgage Scout, Part of LRG said:
“The Bank of England has now confirmed what the mortgage market has been moving towards for months: a reduction in the base rate, and a return to more stable ground. This time last year, interest rates were starting to come down from their historical highs. Which meant mortgage affordability was under immense pressure, and buyer confidence had taken a hit. Throughout 2025, we’ve seen a steady improvement in financial conditions. Swap rates have eased, lenders have re-entered the market with sharper pricing, and affordability criteria have been relaxed. Today’s decision reinforces that momentum.
It won’t bring rates back to where they were before rates began rising, but it does mark a clear shift in tone. And that matters, particularly for the thousands of borrowers whose ultra-low fixed rates expire in 2026. While their repayments will still increase, today’s cut softens the landing.
Just as importantly, it sends a signal to buyers who have been holding back – the market is stabilising. Combined with greater product choice and rising lender competition, this should give people more confidence to move, refinance, or step onto the ladder, helping unlock demand and support a healthier, more active sales market in 2026.”
Simon Webb, managing director of capital markets and finance at LiveMore, commented:
“Today’s base rate cut will provide welcome breathing space for many older borrowers, particularly those on variable rate or tracker products. The Autumn Budget announcement included a number of changes that will disproportionately affect many older homeowners, especially those who are asset-rich but cash-poor. Falling interest rates as we head into 2026 will increase affordability for any older borrowers looking to remortgage, as part of the estimated 1.8 million mortgages due to mature next year.
Affordability is a key concern at LiveMore, so we’ve designed our lending solutions to consider more than just traditional lending criteria. Via our Mortgage Matcher® we can also identify solutions from our wide range of products, whether that’s a RIO mortgage, an interest-only product or a lifetime mortgage, that may be appropriate for clients.”
Matt Harrison, customer success director at Finova Broker, said:
“Affordability looks set to be a big issue for borrowers remortgaging in the next 12 months. Although interest rates are generally below 5%, they are far higher now than they were when many borrowers entered their current fixed-rate mortgage deals.
Today’s cut should go some way to ease that affordability pressure and generate even more competition between lenders to offer the best rates. With so many mortgages due to mature next year (1.8 million forecast by UK Finance) there are plenty of deals to be had – lenders should prioritise affordability and trust that further cuts to the base rate will follow in the new year.”
Rob Clifford, Chief Executive of Stonebridge, has commented on the Bank of England’s MPC’s decision today to cut rates to 3.75%:
“The Bank of England’s decision to cut rates again today shows growing confidence that the inflation threat is easing as hoped. Price pressures are coming down faster than expected, and wage growth is slowing, giving the Monetary Policy Committee room to start supporting an economy that has lost momentum.
This cut is as much about kick-starting activity as it is about recognising progress on inflation. The Bank will still move cautiously, and we’re unlikely to see a rapid run of cuts, but the direction of travel is now clear. On current trends, we expect two further reductions in 2026.
For the mortgage market, today’s decision to reduce to 3.75%, the lowest level in nearly three years, provides fresh and real momentum. Many lenders had already been cutting rates and launching really attractive deals in anticipation, and this cut will keep that trend going. Competition will intensify, putting further downward pressure on pricing as the impact of today’s move feeds through.
For brokers, this is the moment to re-engage clients approaching the end of existing mortgage deals. Falling rates can encourage borrowers to sit on their hands, but proactive advice now will help them secure the right deal in a market that is evolving.”
Enzo Mora, CEO and founder of The Mortgage Brain, responds to the latest rate cut:
“Markets will react positively to this welcome pre-Christmas present of lower interest rates. We have already seen a rise in mortgage activity following the back of the budget blues, as confidence returns to the market and people are just getting on with a move. As we head into 2026, mortgage rates will continue to become more competitive, especially with further cuts on the horizon. We welcome the FCA’s plans to help widen access to affordable mortgages, especially for first-time buyers and later-life borrowers. We are also encouraged that the latest new housing start figures for the UK were up by 14% on last year and 8% in 2Q2025. The planning and infrastructure bill is set to get Royal Assent in 2026, and this can’t come soon enough to get more homes built, without which we will see buyers of all ages stymied when it comes to home ownership.”
Steve Goodall, Managing Director at e.surv Chartered Surveyors, commented:
“The decision to cut interest rates to 3.75% pre-Christmas is a welcome signal for the housing market after several cautious months where it was felt buyers, sellers and lenders had reason to be in a wait and see mode, particularly during the run up to the Autumn budget.
Since the budget, lenders have reduced mortgage rates, and there has been news from the FCA that they are considering relaxing borrowing rules.
This latest news of a reduction in the base rate should therefore continue to help reset customer sentiment as we end the year and move into January with a more positive outlook for activity.
While this cut won’t transform affordability overnight, it will assist in easing pressure on mortgage pricing and monthly repayments, particularly for borrowers coming off fixed-rate deals – offering the lowest borrowing costs since January 2023. That psychological shift is just as important as the financial one – confidence has been in short supply.”