Financial forecasters are currently predicting interest rates will continue to fall due to several deflationary factors such as the falling price of oil (currently at a four-year low) and Trump’s tariff war. 

 

The BoE base rate influences the interest rate banks and building societies offer savers and borrowers. So, while today’s decision won’t be music to the ears of savers, it’s a different story for mortgage holders or those looking to buy property. 

 

Those on tracker rates should immediately notice the difference in their monthly payments whilst homeowners on fixed rates will benefit from lower rates when they come to renew their deal. 

 

Acting in anticipation of today’s cut, HSBC dropped its rates last week so that all its products now fall below 5% for the first time since 2022 whilst buyers with higher deposits may be able to secure deals at below 4%. 

In general, lower interest rates boost activity in the property sector. 

 

It makes borrowing more affordable for buyers, increasing the number of players in the market. This, in turn, means a larger pool of potential buyers for sellers to choose from, driving up competition and sometimes prices although with stock levels at 10 year highs (see our article 7th May) the latter is unlikely.