Key Highlights

The Bank of England has reduced its base interest rate from 4.25% to 4%—the fifth cut in the past 12 months—bringing borrowing costs back to where they were in March 2023. While this move won’t impact all borrowers immediately, it sends a clear signal: interest rates are on a downward path, and that’s good news for both homebuyers and property investors.

What the Rate Cut Means for Mortgage Borrowers

Although most UK mortgage holders (around 85%) are on fixed-rate deals and won’t see an immediate change in repayments, the rate cut will offer instant relief for the estimated 600,000 borrowers with base-rate tracker mortgages. According to UK Finance, a typical tracker mortgage holder with an outstanding balance of £140,000 will now save around £29 per month.

Those on standard variable rate (SVR) mortgages—approximately 540,000 people—may also benefit if lenders choose to follow the Bank’s lead. If passed on in full, this could save the average SVR borrower around £14 per month.

Crucially for property investors and homeowners coming off fixed deals, this cut marks a continued shift toward more affordable borrowing. With approximately 900,000 fixed-rate deals set to expire in the second half of 2025, the timing of this rate drop could soften the financial impact of remortgaging and open up new opportunities.

Market Trends: Lower Fixed Rates on the Horizon

Recent weeks have seen a gentle but steady decline in the cost of new fixed-rate mortgage products. On the day of the interest rate cut:

• The average five-year fixed mortgage stood at 5.01%, down from 5.09% at the start of June.
• The average two-year fix dipped to 5%, and for the first time since 2022, it’s now cheaper than the five-year option—an indicator that the market is returning to a more stable, predictable pattern.

Even more encouragingly, a handful of two- and five-year deals are now priced below 3.8%, with lenders such as Santander and NatWest offering competitive rates to those with larger deposits.

This is welcome news for those entering the market or looking to remortgage, especially after the highs of 2023.

For investors, lower long-term borrowing costs improve yield projections and increase flexibility when planning purchases or portfolio expansions.

Why This Is a Positive Signal for Investors

While the current cut may only marginally reduce repayments today, the long-term trend is more important. The Bank of England’s careful yet consistent action toward lower interest rates improves the investment landscape:

• Improved affordability for new purchases
• Lower financing costs for portfolio growth
• More stable environment for long-term planning

Inflation remains a concern—now expected to peak at 4% in September—but this is being weighed carefully against economic growth and employment factors. As the Bank proceeds cautiously, investors can be optimistic that borrowing will continue to get cheaper in the months ahead.

Looking Ahead

This latest move by the Bank of England confirms that the era of elevated interest rates is easing. While savers may see returns dip slightly, borrowers and property investors are well-positioned to benefit from improving affordability and greater certainty in the mortgage market.

If you’re considering a new investment, refinancing, or expanding your portfolio, now is a smart time to review your options. The window for locking in lower rates may be opening.

North Property Group is here to support current and potential clients with their financing decisions. Get in touch today if you’d like to talk over what this base rate cut means for you.