Falling Interest Rates Set To Reignite The Uk Property Market

Mortgage rates drop, boosting buyer confidence and energising property market.

Recent forecasts suggest that UK interest rates are set to fall at their fastest pace since the 2008 financial crisis, and this is excellent news for the property market. Economists are predicting that the Bank of England will reduce the base rate from 4.5% to 4.25% this week, marking the second cut this year. Further reductions could see rates drop by as much as 1% over the next six months, bringing the cost of borrowing below 3% for the first time since October 2022.

This trend offers a much-needed lift for both buyers and sellers. For those looking to purchase a home, lower interest rates translate into more affordable mortgage repayments. Many major lenders, including Barclays, HSBC and NatWest, have already begun reducing their fixed-rate deals, with some now falling below the 4% threshold. This move will be welcomed by first-time buyers and home movers alike, who can now benefit from improved affordability and increased borrowing capacity.
For sellers, falling rates are likely to stimulate demand, encouraging more activity across the housing market. With borrowing becoming cheaper, hesitant buyers may now feel more confident about committing to a purchase, particularly in areas where property prices have remained stable or even dipped slightly.

Lower rates also benefit landlords and investors, as cheaper finance can improve rental yields and make property acquisitions more attractive. As the Bank of England responds to global economic pressures – including concerns around US trade policy – these rate cuts could play a crucial role in sustaining momentum in the housing market.

As confidence builds and borrowing becomes more affordable, the outlook for the remainder of 2025 is decidedly optimistic.