Base rate cut – good for home-owners seeking to move

Shropshire’s residential property market received good news as the Bank of England today announced the base rate reduction by 0.25% to 3.75%, says Balfours Head of sales, Alistair Hilton.

The much-anticipated drop was a tight call, with just five of the nine Monetary Policy Committee voting for the cut. Alistair reflects: “The Committee are walking a tight rope; their principal mandate is to bring inflation down and maintain it at around two per cent. We are not there yet, but earlier this week the November Consumer Price Inflation revealed a drop from 3.6 percent to 3.2 percent which was lower than the markets had anticipated.”

According to Alistair with inflation heading in the right direction, the Bank of England was well placed to drive base rate closer to the “neutral” territory of three percent, which is neither encouraging nor restricting lending.  Neutral lending is the foundation of a balanced residential market, neither boom, nor bust.”

Rightmove figures, released last week, for the 11 months from January 2025 reveal that 75% of all residential transactions are accounted for by properties marketed sub £500,000 and that the number of transactions fell by four percent. Meantime those worth more than half a million account for 25% of the market; transactions in this category dropped by eight percent.

Alistair adds: “Mortgage lenders anticipated the cut in base rate and are already more competitive, I think 2026 will see another quarter percent shaved off the base rate, edging us ever closer to that three percent sweet-spot. There’s a 50% chance that we could have a second cut next year, if that happens it will provide even greater stimulation for vendors and buyers to move organically up and down the property ladder.”

He concludes that by mid-January we will know if the price war between mortgage lenders is set to continue. There is no doubt, today’s announcement signifies that now is a good time to move and should stimulate the market to a positive year ahead.”