Good News for Homeowners This Christmas
The Bank of England has cut the base rate from 4.00% to 3.75%—a positive shift for mortgages, buyer confidence, and market activity. If you're considering a move, here's what this means for you.
How Mortgage Rates Are Changing
Homeowners on tracker mortgages and many on standard variable rates are likely to see their payments reduce shortly after the base rate cut. These products move in line with the Bank of England's rate, so reductions are usually passed on quickly, improving affordability immediately.
For those on fixed-rate deals, payments stay the same until the end of the current term. However, base rate cuts tend to feed into lower fixed mortgage rates over time as lenders compete more aggressively. Many lenders had already started reducing fixed rates in anticipation of this cut, meaning buyers securing mortgages now often have access to better deals than earlier in the year.
What This Means for Buyer Confidence
Lower interest rates don't just affect monthly repayments—they influence confidence. As borrowing becomes cheaper, more buyers are able to pass affordability checks, some can borrow slightly more, and others feel more comfortable making a move they may have delayed. This is particularly relevant for first-time buyers and people looking to move up the ladder, both of whom form a large part of the active buyer market.
The Impact on Property Market Activity
A base rate cut acts as a confidence signal. It doesn't cause house prices to jump overnight, but it can increase enquiries and viewing levels, reduce hesitation amongst buyers who were "waiting to see what happens", and support competition on well-priced homes. As affordability improves, chains also tend to become more stable, reducing the risk of transactions falling through later in the process.
Why This Matters If You're Thinking About Selling
For homeowners considering a sale, this change helps create a more supportive market environment. Buyers have more confidence in their finances, mortgage costs are moving in the right direction, and activity tends to build gradually in the months following a rate cut.
The key takeaway is that this shift improves market momentum rather than creating a sudden surge. Properties priced realistically and marketed well are best placed to benefit from improving conditions.
Looking Ahead
Many economists expect further base rate reductions during 2026 if inflation continues to ease. While nothing is guaranteed, this first cut is often seen as a turning point—signalling that the peak of interest rates is behind us. For those planning a move, this can be a helpful window: buyer confidence is improving, but competition has not yet reached the levels seen in stronger markets.
The base rate cut from 4.00% to 3.75% helps reduce borrowing costs, improves buyer affordability, encourages market activity, and supports confidence heading into the New Year. If you're considering selling your home, this shift in the market is a positive one—particularly when combined with realistic pricing and professional advice.
If you'd like to discuss what this means for your property or receive a complimentary valuation, please don't hesitate to get in touch. We're here to help you navigate the market with confidence.
