Today, the Bank of England’s monetary policy committee cut the base rate from 5.25% to 5% after UK inflation fell to the central bank’s 2% target in recent months. This was the bank’s first rate cut since 2020.

The committee vote was split with five members voting in favour of the cut, and four against.

Lenders and brokers alike have welcomed the news. Chris Gardner, CEO at Atelier, said that BoE interest rate cut will offer the market some breathing space and allow for forward momentum.

“There is no doubt that the current interest rates environment has had a painfully stifling effect on both supply and demand in our housing market.

“Anticipation has been building for some time about when the BoE interest rates cut would come and today is finally the day. Property developers, lenders and potential buyers will be breathing a huge sigh of relief at the news.

“[Yesterday’s] interest rate cut will offer much-needed relief for the market. It is the catalyst we have been looking for to get the property market moving again.”

Jatin Ondhia, CEO at Shojin Property Partners, also sees the rate cut encouraging more activity as an official acknowledgement that the UK’s economic prospects may be improving.

“The decision is a key indicator of the growing sense of economic stability and will likely open up new opportunities for investors as they reassess how to manage their portfolios,” added Jatin.

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“The impact of the high inflation / high interest environment of the last couple of years cannot be underestimated. Homeowners have faced higher mortgage rates than at any point since the financial crisis, while developers have found it harder to access much-needed finance. Today’s decision hopefully signals a clear transition away from this challenging period.”

However, many remain cautious. Ben Nichols, interim managing director at RAW Capital Partners, also welcomed the cut but highlighted that rates remain high.

“For a surge in activity to materialise, brokers and their clients must be equipped with the tools they need to confidently execute their investment plans,” he added.

“Lenders must recommit to offering a wide range of bespoke and flexible financial products to support the property market’s continued recovery.”

Despite the cut, uncertainty remains. Though inflation has fallen some are wary this could return (“there must be a mindful eye kept on inflationary figures before the MPC meets again,” warned Gareth Lewis, managing director of MT Finance), and others highlighted the split nature of the committee’s vote.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said when rate decisions are this close then this could mean a “relatively minimal” impact on the market.

“Of course, some buyers have been holding off in anticipation of a cut for some time but mortgage rates ‘on the street’ have been softening over recent weeks anyway,” said Jeremy.

“The approximate 40% of buyers who are not dependent on finance will probably be negotiating just as hard to take advantage of their better bargaining position.

“This reduction in rates to 5%t will certainly act as a shot in the arm for activity and buyer affordability over the short term at least, complemented by a strong employment picture.”