The Bank of England’s decision to hold the base rate steady at 4.25% in June 2025 has sparked widespread interest across the financial and property sectors. While the move was largely anticipated, the key takeaway from this latest announcement is what may come next — and it could offer some relief for borrowers.
Why Were Rates Held?
Despite expectations of a rate cut this summer, the Bank of England opted to keep rates unchanged for now, citing persistent inflationary pressures and ongoing geopolitical tensions, particularly in the Middle East. The inflation rate for May stood at 3.4%, still well above the Bank’s 2% target.
A major contributing factor to this inflation has been the volatility in global oil markets, driven by unrest and uncertainty in oil-producing regions. Rising energy costs often ripple through the broader economy, influencing everything from transportation to food prices — and making it more difficult for inflation to fall back in line with targets.
Are Cuts Still on the Table?
Yes — and that’s the more optimistic news. Despite the pause in June, there are strong indications that the Bank may start lowering interest rates as early as August. According to the latest consensus forecasts from HM Treasury, two cuts are expected before the end of the year, potentially bringing the base rate down to 3.75%. Further easing could take the rate to 3.5% by the end of 2026.
This would mark a significant shift from the cycle of aggressive rate hikes we’ve seen over the past two years as the Bank attempted to control inflation post-Covid and in the wake of the energy crisis.
What Does This Mean for Buyers, Sellers, and Homeowners?
If you're considering entering the housing market or refinancing a mortgage, the outlook is cautiously optimistic:
- For buyers, the prospect of falling interest rates could improve mortgage affordability, opening up more opportunities, particularly for first-time buyers.
- For homeowners with variable-rate mortgages, future cuts could ease monthly payments later this year.
- For sellers, the gradual return of buyer confidence as borrowing costs ease may help support stable or rising property values, especially in areas where demand remains high.
However, it’s important to remember that the Bank is walking a tightrope — cutting rates too quickly could risk reigniting inflation. As such, any monetary policy decisions are likely to be measured and dependent on the evolving global and domestic economic landscape.
Final Thoughts
While the base rate remains at 4.25% for now, the message from policymakers is clear: we may be approaching a turning point. As inflation cools and economic conditions stabilise, the Bank of England appears ready to support growth through more accommodative interest rates — potentially providing a welcome boost to the property market.
As always, we’ll be keeping a close eye on the data and any announcements from the Bank in the months ahead. Whether you're buying, selling, or simply watching the market, staying informed is key.
📌 Sources: Dataloft by PriceHubble, Bank of England, HM Treasury Consensus Forecasts (June 2025)