Posted on 14th May 2025
This month, the Bank of England reduced its base rate again, from 4.5% down to 4.25% with the Governor hinting more cuts could be made in the months to come.
For the fourth time in the past year, the bank has chosen to cut the rate which will be good news for people buying property or searching for a new mortgage deal.
The base rate dictates the rate at which mortgage lenders charge their customers. Creeping up steadily since the end of 2021, where interest rates were historically low for a decade or so, significant jumps in the rate have meant increased monthly payments for thousands of mortgage holders when their fixed terms came to an end. This would often mean hundreds of pounds a month more.
For savers, though, higher interest rates have resulted in a better return on their money sitting in the bank.
In terms of the property industry, a reduction in the base rate, and in turn interest rates charged by lenders, can only be a positive thing. Cheaper mortgages will drive property sales.
Last week, the average 2-year fixed mortgage rate was 5.14%, while a 5-year deal was 5.08%. As the markets settle and the base rate remains steady or drops further, these interest rates will also continue to fall.
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