Property News
Base rate cut – what it means for homebuyers and sellers
On 7 August 2025, the Bank of England lowered the base rate by 0.25 percentage points, bringing it down to 4%. This was the third cut this year, following earlier reductions in May and spring.
TheHub@Druce- •
- 15 Aug 2025
Base rate cut – what it means for homebuyers and sellers
Impact on Mortgage Rates
- Average 2-year and 5-year fixed mortgage rates are now around 4.50%, down by 0.73 points and 0.35 points respectively compared with last year.
- The most competitive deals on the market are even lower, at 3.69% for 2-year fixes and 3.84% for 5-year fixes.
Example 1 – First-time buyer, £180,000 mortgage over 30 years (20% deposit)
- Last year (5.21%): Monthly repayment ~ £1,002
- Now (4.38%): Monthly repayment ~ £909
- Monthly savings: ~ £93
For London buyers, the savings are greater: up to £240 a month compared to last year.
Example 2 – £200,000 tracker mortgage over 25 years
- At 5.00%: Monthly repayment ~ £1,169
- At 4.75%: Monthly repayment ~ £1,140
- Monthly savings: ~ £29
Quick Summary of Calculations
| Scenario | Old Rate | Old Monthly | New Rate | New Monthly | Monthly Saving |
| £180k, 30 yrs, FTB (20% deposit) | 5.21% | £1,002 | 4.38% | £909 | £93 |
| £200k tracker, 25 yrs | 5.00% | £1,169 | 4.75% | £1,140 | £29 |
Housing Market Effects
- Average asking price in August is £368,740, down 1.3% month-on-month, but still 0.3% higher year-on-year.
- The stock of homes for sale is up 10% compared with last year.
- Agreed sales are also up 8% year-on-year, showing buyer demand has picked up.
- 34% of properties currently listed have had a price reduction – the highest level since 2023.
- Homes priced correctly from the start sell in 32 days on average, while those reduced later take much longer (99 days).
Conclusions:
- Base rate cuts are easing monthly costs for both new buyers and those switching from variable or tracker products.
- Buyers are in a stronger position, with cheaper mortgage rates and stable property prices.
- Listings and agreed-upon sales are increasing, particularly in well-priced segments.
- Sellers who get the price right from day one achieve faster sales, while overpriced homes linger on the market.
Looking for an All-in-one advisor on your property? Contact @Druce today!
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