The move was widely anticipated and reflects a pragmatic response to the shifting economic landscape.
At its meeting ending yesterday (7 May 2025), the MPC voted by a majority of 5:4 to reduce the bank rate by 0.25 percentage points to 4.25%. Two members preferred to reduce the bank rate by 0.5 percentage points to 4%, while two members preferred to maintain the bank rate at 4.5%.
The MPC said the rate cut reflected continued progress in disinflation, though with risks to inflation remaining in both directions.
What the base rate cut means for mortgages
The base rate reduction will mean cheaper payments for homeowners with tracker mortgages and some other variable rate deals too – depending on whether lenders pass on the rate cut in full. Those looking for a new fixed rate mortgage may be able to find cheaper deals than previously.
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Nicholas Mendes, head of marketing at John Charcol, said: “While fixed rates have already priced in much of this decision, the cut will support sentiment in the housing market at a time when affordability has been stretched and buyer activity has slowed. It also gives lenders a bit more breathing room to remain competitive, which could help stimulate demand, especially among first-time buyers.
“That said, this is unlikely to mark the start of a rapid easing cycle. Wage growth remains strong, fiscal changes are still filtering through, and services inflation is well above target. The bank will need to tread carefully from here. While today’s cut is helpful, borrowers should continue to plan with caution. Locking in a competitive fixed rate still makes sense for many, particularly if there is any doubt about future income or affordability.”
This article was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: Base rate reduced to 4.25%
