The Bank of England has now reduced the base rate to 4.0%, signalling a continued step towards easing after two years of sharp increases. Inflation has moved closer to the 2% target, and wage growth is slowing, giving policymakers room to act. However, expectations remain for only gradual cuts through the rest of 2025 and into 2026. The message is clear: the ultra-low rates that defined the decade after 2008 are unlikely to return but reductions are still likely.

For borrowers, this means the current cycle is less about dramatic reductions and more about stabilisation. Mortgage holders still face significantly higher repayments than during the last decade but further increases look unlikely. Lenders are already adjusting their product ranges, with many fixed rates now below 4%. Affordability remains tighter than in the past; however, this is also now starting to ease as rates are reduced, and stress tests follow suit.

Meanwhile, the broader housing market is showing resilience. After a period of subdued activity, enquiries and approvals are beginning to pick up as confidence improves. Sellers are becoming more realistic on pricing, while buyers are cautiously returning as they gain clarity on the direction of interest rates. For investors and high-value borrowers, competition among lenders is opening opportunities to secure favourable terms, though careful structuring and advice remain critical.

In short, the UK is entering a steadier phase: interest rates are starting to ease but will remain structurally higher than many have become accustomed to, while the property market is regaining momentum in a more disciplined environment. Henry Dannell is here to guide you in making borrowing decisions that remain sustainable as the market continues to adjust.