The Bank of England has decided to cut the base rate by 0.25% to 4.75%.

This marks the second rate cut since August when it was lowered from 5.25% to 5%. Prior to that, the BoE made 14 consecutive rate increases.

Commenting on the latest BoE rate decision, CHL Mortgages commercial director Ross Turrell  said: “Today’s rate cut injects some much-needed positivity back into the mortgages and property market after the turbulence stemming from last week’s Budget.

“It also highlights the variety of trends and challenges that UK landlords are currently having to navigate. On one hand, rates are falling while property prices continue to creep upwards; on the other, new regulations and tax reforms are sparking questions about how best to manage portfolios.

But Turrell is keen to stress, when is the BTL market not facing challenges? “Over the past decade it has been subjected to a great deal of change, yet it has proven resilient and shown positive performance despite the challenges it has faced. The cost of borrowing is a critical factor in driving demand for property investments, so the continuation of rate cuts by the Bank of England ought to trigger greater activity across the property market in the months ahead.”

Turbulent week

Market Financial Solutions chief executive Paresh Raja said the market would be breathing a sigh of relief.

“A cut always looked likely, but the turbulence of the past week – the Budget and US election – could have encouraged the Bank of England to hold. Lenders are able to pass lower rates on to borrowers, providing a much-needed boost to homebuyers and property investors alike. We anticipate that the market will gain momentum in the coming weeks as it adjusts to a more accommodating – though still challenging – monetary environment.

He added: “The past few months have provided a timely reminder that the actions of Threadneedle Street typically exert a greater influence on market activity than decisions made in Westminster. The house price growth following the Bank of England’s last rate cut in August reflects this impact, and today’s cut should inspire further confidence. It’s therefore crucial that investors prepare for a likely surge in market activity and position themselves to seize any opportunities that could soon emerge.”

Phoebus Software chief sales and marketing officer Richard Pike said that following the UK Budget and the US election result, overall, the markets were reacting positively. “Coupled with lower-than-expected inflation figures last month, today’s Rate cut is not unexpected and means we can look forward to a strong finish to the year.

“We shouldn’t expect a massive change in fixed mortgage rates than those already planned by lenders, and with inflation looking like it will rise again moving into 2025, another cut in December is looking more unlikely.

He added: “With such a constantly evolving economic picture, consumers may continue to struggle on product choice, but with more choice continually coming to market this shouldn’t affect gross mortgage lending figures moving forward”.

Eyes on the US

Stonebridge chief executive Rob Clifford was encouraged that rate setters opted for a fresh cut despite last week’s budget, which the OBR cautioned would raise inflation and potentially rates. And also despite fears the victory of Trump in the US presidential election could lead to renewed global inflationary pressures, thanks to the President-elect’s views on tax cuts and import tariff hikes.

“Any arrival of tax cuts and trade tariffs in the US economy will have potentially profound implications for markets, and this will feed directly into the Bank’s future thinking as it looks to continue curbing any renewal of inflation.

He added: “However, with inflation currently below its 2% target, the MPC has felt comfortable providing what will be welcome news for mortgage borrowers.”

Chetwood Bank chief executive agreed that the cut was  very welcome news. “Following the Budget in which property ownership came under the spotlight, today’s decision brings some positivity to the mortgage market.

“Looking at the bigger picture, there are challenges for landlords to wrestle with, whether that’s the Stamp Duty surcharge, the Capital Gains Tax increase or regulatory reform, but the buy-to-let market has consistently shown itself to be resilient in the face of adversity.

“Ultimately, it’s the cost of borrowing that will be the major influence on people’s property-buying plans, so today’s cut – and the hope of more – will encourage greater market activity among landlords and homebuyers in the coming months.”

Moving the dial

Mortgage Advice Bureau deputy chief executive Ben Thompson said: “Another rate cut is starting to move the dial back again in the borrower’s favour, following an eventful week or so since the budget. With the Bank of England opting for another steady 0.25 cut, we could see swap rates and, consequently, mortgage rates fall, subject to markets settling further following the budget and the outcome of the US election also.”

He added “Our data shows that falling rates have already impacted borrower preference. Last month, over half (54%) of borrowers opted for a five-year fixed rate, an increase of 11% versus the same period last year, clearly showing a change in customer mindset.

“It will be interesting to look again at this after the dust has settled following the budget and the outcome of the US election, and their combined impact on mortgage pricing.”

The Monetary Policy Committee vote was split eight to one. Eight members voted to cut: Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Huw Pill, Dave Ramsden and Alan Taylor

One member voted to hold: Catherine Mann.