The Bank of England made headlines in May by announcing its first base rate cut since the pandemic — bringing the rate down to 4.25%. For many, this was the signal they were waiting for. It marks a potential turning point for the UK housing market, and the ripple effects are already being felt across Wigan.
If you’re planning to buy or sell a home in the near future, here’s what this change means for you.
Why the Base Rate Was Cut
With inflation steady at 2.6% in both March and April, below the Bank’s 2% target, the Monetary Policy Committee had the room it needed to start easing interest rates. Economic growth is still sluggish (forecast at 1.1% for the year), but rising wages (up 5.4%) and falling inflation gave the Bank the green light to begin lowering the cost of borrowing.
This 0.25 percentage point cut might seem small, but it’s a meaningful first step — and more could be on the way. Markets are currently predicting two more 0.25% cuts by the end of 2025, potentially bringing the base rate down to 3.75%.
The Mortgage Market Is Already Responding
Mortgage lenders have moved quickly to adjust. Average rates in May dropped noticeably:
- Two-year fixed rate: 4.52% (down 0.17% from April)
- Five-year fixed rate: 4.48% (down 0.15%)
Compared to last year, mortgage rates are down by as much as 0.87% for some products. Even more encouraging, all of the “big six” lenders (Barclays, HSBC, NatWest, Halifax, Nationwide, Santander) are now offering fixed-rate deals below 4%.
This increased competition is creating real opportunities for buyers especially those with larger deposits or good credit scores.
Affordability Tests Are Easing Too
It’s not just rates that are changing. Lenders are also relaxing how they assess affordability. Mortgage stress test thresholds have been lowered from around 8–9% to 7–8%, meaning that buyers now qualify for larger loans than they did just a few months ago.
According to Zoopla, this shift is giving some buyers a 10–15% increase in purchasing power — opening up more properties and making homeownership more accessible.
First-Time Buyers Are Getting a Boost
The number of low-deposit mortgage products is growing again. In May, there were 458 mortgage deals available for buyers with just a 5% deposit — the highest number since February 2008.
That’s welcome news for first-time buyers, particularly those receiving family support. Recent research shows that 39% of first-time buyers in early 2025 had help from relatives, up from 37% the previous quarter.
So, What Does This Mean for You?
If you’re a buyer, your mortgage options are now broader, more affordable, and more flexible than they were at the start of the year. It’s a good time to review your affordability and see what’s now possible.
If you’re a seller, falling rates mean more motivated buyers in the market — and potentially more competitive offers on your home.
Ready to Explore Your Options?
We can help you understand how the base rate cut affects your buying power, or what it could mean for your home’s value.
Get in touch with us today for advice, a valuation, or to start your search.