On 18 December 2025, the Bank of England’s Monetary Policy Committee (MPC) voted to reduce the UK base rate by 0.25 percentage points, bringing it down from 4.00% to 3.75%. This marks the lowest level since February 2023 and the fourth rate cut this year signalling a shift in economic priorities.
Why Has the Rate Been Cut?
The economy is slowing, and inflation is easing. Prices rose by 3.2% in November, the lowest in eight months while unemployment is creeping up and wage growth remains weak. In light of this, this led to the Bank to act and vote for UK base rate to be cut to 3.75% (albeit, it was a close vote of 5 to 4) and the Bank has said any further cuts will be gradual, with more reductions possible in early 2026.
What Does This Mean for You?
Mortgages:
- If you’re on a tracker or variable-rate mortgage, you could see your monthly payments fall as lenders adjust rates.
- Fixed-rate borrowers won’t notice changes until their current deal ends, but future rates may be more attractive.
Savings:
- Savers may see lower returns, especially on easy-access accounts. It’s worth reviewing your options and considering fixed-term products before further cuts.
Property Market Outlook:
- Lower borrowing costs often boost buyer confidence, which can support activity in the housing market. Analysts expect up to two more cuts by mid-2026, making mortgages even more affordable but uncertainty around inflation and jobs means the Bank will move carefully.
How Luscombe Maye Can Help You?
Changes in interest rates can affect your mortgage, your buying power, and the property market as a whole. At Luscombe Maye, we’re here to guide you through what this means for your plans. Whether you’re thinking about moving, reviewing your mortgage options, or simply want expert advice on the local market, our team combines specialist knowledge and local expertise to help you make confident decisions.
For more information on how these changes could impact you, contact your nearest branch today for a free, no-obligation market appraisal.
