Millions of households are likely to feel a sense of relief today as the Bank of England is widely expected to cut its base rate from 4% to 3.75%.
Market expectations suggest there is now more than a 98% chance that the Monetary Policy Committee will lower borrowing costs in a move that could provide a boost to the housing market.
Figures published yesterday show inflation falling to 3.2% in November, down from 3.6% in October.
The easing of price pressures makes it increasingly likely that the Bank will follow through on the anticipated rate cut after it narrowly decided to hold rates last month. At the time, uncertainty over potential tax rises in the Budget contributed to the decision to maintain rates.
RATE REDUCTIONS
Analysts have also been monitoring the impact of the Chancellor’s increase in employer National Insurance contributions, introduced in April, which had added pressure to businesses and contributed to higher inflation.
The latest data, however, now opens the door to a potential series of rate reductions next year, providing further relief for borrowers.
WELCOME BOOST
Nathan Emerson, Chief Executive of Propertymark, says: “With inflation continuing to ease, there is growing optimism that the Bank of England will have the confidence to cut the base rate.
“Any reduction would provide a welcome boost to housing market confidence, improving affordability for buyers and offering relief to those approaching the end of fixed-rate mortgage deals.
“Lower borrowing costs would help stimulate activity, encourage more first-time buyers to take their first step onto the property ladder, and give existing homeowners greater confidence to move.
“While caution remains important, a shift towards lower interest rates would send a positive signal for both the housing market and the wider economy as we head into 2026.”
IMPROVED AFFORDABILITY
The potential cut comes as the housing market continues to adjust to higher borrowing costs over the past year, and experts suggest it could provide a timely boost to buyers and sellers entering the spring 2026 season.
First-time buyers, in particular, could benefit from improved affordability, while those with fixed-rate mortgages nearing their term may find some financial breathing space.
