Could the Bank of England potentially lower interest rates in the future?
Interest Rate Cuts on the Horizon: Implications for Landlords and the Property Market
In a move that could bring relief to many, experts forecast that the Bank of England will implement two more reductions in interest rates before the end of 2024, bringing rates down to around 4.5%. This announcement comes after a series of increases since late 2021 to combat inflation.
The first rate cut occurred in August 2024, marking the start of a gradual easing cycle after inflation pressures eased somewhat but remained above the Bank's target. However, the pace of further rate cuts has been cautious due to persistent inflation risks.
For landlords, this anticipated decrease in high interest rates could be beneficial. Sam Reynolds, CEO of Zero Deposit, stated that such a move could alleviate some of the financial burden they have been experiencing due to expensive variable rate products. Reynolds also pointed out that many landlords have only been repaying the interest on their loan, leading to a greater increase in mortgage costs over time compared to those making full monthly repayments.
On the other hand, the decision to maintain interest rates at 5.25% for a prolonged period has added further stability to the property market. Jason Ferrando, CEO of easyMoney, claimed that this decision will allow those attempting to form a nest egg a further period of stronger returns on their savings. Guy Gittins, CEO of Foxtons, stated that the UK property market has seen increased buyer activity since interest rates were held at 5.25% last September.
Financial markets predict the first quarter-point cut in interest rates will occur in June 2024. However, the Bank of England has yet to confirm these predictions, stating that cuts to interest rates are "in play" but have not yet occurred.
The Bank of England's governor, Andrew Bailey, said that inflation is showing encouraging signs of coming down, but the Bank emphasizes a gradual and careful approach to further rate reductions. As of the latest information in August 2025, market expectations suggest the Bank might slow the pace of cuts or delay additional cuts in the short term due to rising inflation risks; a further cut in late 2024 or 2025 is possible but uncertain.
Meanwhile, the Office for National Statistics (ONS) reported a drop in inflation more than expected earlier in the week, which could potentially speed up the timeline for further interest rate cuts.
Jason Harris-Cohen, CEO of Open Property Group, claimed that although the Bank of England is working to ensure inflation rates keep coming down, a rate cut is what the property market needs to move forward at pace. This sentiment was echoed by Reynolds, who mentioned that landlords have been suffering from the high-interest environment.
In conclusion, the expected timeline for interest rate cuts beginning in August 2024 was to reduce rates gradually through late 2024 and into 2025. However, the pace has become cautious due to persistent inflation risks. Additional cuts in late 2024 were implemented, but further cuts beyond that depend on inflation data, which has been at or slightly above target, causing the Bank to signal a careful, data-driven approach rather than automatic reductions.
The impending interest rate cuts, starting in August 2024, might positively impact housing finance for landlords, as reducing high rates could alleviate some of their financial burdens arising from expensive variable rate products. Concurrently, the prolonged maintenance of higher interest rates at 5.25% since September 2023 strengthened the property market, allowing those attempting to save a greater period of strong returns on their savings and prompting increased buyer activity.
