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Key Highlights
UK
- A rate cut from 4.5% to 4.25% has been made by the Bank of England, making it a second reduction this year.
- This strategy is intended to stimulate economic growth in the UK and reduce mortgage expenses for millions of households.
- Major UK lenders have already lowered fixed mortgage rates, offering relief to borrowers.
The Bank of England (BoE) has once again sliced the interest rate by 0.25%, in response to global trade tensions, particularly from US tariff policies under President Trump. This move aims to support UK growth and ease mortgage costs for millions of homeowners.
Interest Rate Cut to 4.25%
The Bank of England (BoE) is anticipated to reduce interest rates at the fastest pace since the 2008 financial crash, in response to growing global economic pressures. A rate cut from 4.5% to 4.25% has been made, marking the second reduction this year following a drop from 4.75% in February.
Economists now forecast a total decrease of up to 1% over the next six months, as the central bank aims to mitigate the impact of slowing growth and international instability.
Immediate Effects of Rate Cut on Borrowers and Savers
The Bank of England’s second interest rate reduction this year is set to directly affect hundreds of thousands of mortgage holders. Around 600,000 people on tracker mortgages can expect their monthly payments to drop by roughly £29, based on estimates from UK Finance. Meanwhile, those on standard variable rates will need to wait and see how their lenders respond, and savers with easy-access accounts are likely to hear soon from their banks about changes to interest returns.
Relief for Mortgage Holders as Lenders Cut Rates
Borrowers had already been seeing the effects of the Bank’s changing stance this past week. Major lenders such as Barclays, HSBC and NatWest lowered their fixed-rate mortgage deals by up to 0.25%, with some two-year fixed options now available below 4%. Halifax, Nationwide and Santander also followed suit.
For homeowners with a typical £200,000 mortgage, the reduced rates could mean annual savings of over £500. The Financial Conduct Authority estimates that nearly 1.7 million fixed-rate deals are due to expire this year, potentially bringing relief to a significant number of households.
Pressure Builds for Further Action
Banks and analysts have been calling for a bold response from the Bank of England. Institutions like Morgan Stanley and UBS expect a series of cuts over the coming months. Morgan Stanley projects a 0.25-point reduction at each of the Bank’s next five meetings, potentially pushing the base rate down to 3.25% by November, with further easing into 2026.
UBS has gone further, suggesting that interest rates may be lowered at every meeting, rather than quarterly, if the economic fallout from US tariffs worsens. Barclays also forecasts multiple consecutive cuts, underscoring the urgency to support the economy.
Government and Economic Outlook
The Treasury has cautiously welcomed the move towards lower borrowing costs, attributing it in part to fiscal prudence under Chancellor Rachel Reeves. Officials argue that the Bank of England’s ability to ease policy stands in contrast to the US Federal Reserve, which is constrained by rising inflation caused by its own tariffs.
The Bank of England has also upgraded its outlook for the UK economy, now forecasting 1% GDP growth for 2025, up from its earlier 0.75% estimate, mainly due to growth over the first three months of 2025 being higher than anticipated.
At North Property Group, we recognise how these economic fluctuations can affect property investments. Our team is dedicated to assisting investors in navigating these changes with customised advice and prime opportunities. Whether you’re aiming to expand your portfolio or explore new property ventures, contact us today to make informed, strategic decisions in a dynamic market.
About Us
North Property Group is a premium property investment agency and lettings agency focusing on premium UK real estate. We are a team of experts dedicated to finding you the best opportunities and guiding you through the investment lifecycle. We have in-depth knowledge of the property market and policy changes within the industry, so we can help guide and advise as the UK government unveils its new budget.
Book a free consultation with us today to start your journey of investing in off-plan UK property.
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From £250,000
Yield: 7%
In Construction
Est. Q2 2028
Lease Length: 250 Years
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