Back to all Blog 08 May 2025

Interest rate cut to 4.25%

Housing market leaders have welcomed the latest news from the Bank of England's Monetary Policy Committee Widely anticipated, the Bank of England has just decided to cut the base rate of interest by 0.25%, to 4.25%.

Five of the nine Monetary Policy Committee members voted in favour of a reduction, encouraged by a slight easing of inflation in March (although at 2.6% it remains above the central bank’s 2.0% inflation target). Two members preferred a bigger cut (-0.5%), and two thought maintaining the rate at 4.5% was a better option. “There has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations,” explains the Bank of England. “That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.” This second rate reduction of the year so far follows a hold in March. As you’d expect, news of cheaper lending has been roundly welcomed by most in the property industry – and there is a consensus view that the base rate will come down further in the coming months. The next MPC decision on rates is due on 19th June 2025.

 

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