Mortgage Bills Set to Fall – What the Latest Interest Rate Cut Means for Auction Buyers
Millions of homeowners across the UK are set to benefit from reduced mortgage payments following the Bank of England’s latest decision to lower interest rates (https://www.thesun.co.uk May,2025). In a move welcomed by borrowers and property investors alike, the base rate has been cut from 4.5% to 4.25%, the second reduction this year and the fourth since 2020.
The timing couldn’t be better: Auction House London has just released its May auction catalogue, offering an extensive selection of residential, investment opportunities and land at a time when borrowing costs are easing.
What the Interest Rate Cut Means
The decision by the Bank’s Monetary Policy Committee (MPC) reflects a shift toward supporting economic growth, as inflationary pressures continue to ease. With inflation dropping to 2.6% in March and forecasts suggesting a return to the 2% target by early 2027, the MPC felt confident in reducing the base rate.
Five of the nine committee members voted for the 0.25 percentage point cut, while others were split, two wanted to hold steady, and two pushed for an even sharper reduction to 4%. The vote signals a broader appetite for making borrowing more accessible, with further rate cuts expected later in the year.
Lower Monthly Payments for Many
The implications could be immediate for property owners, especially those with tracker or standard variable rate (SVR) mortgages. Approximately 591,000 tracker mortgage holders and 540,000 SVR customers will likely see reductions of £350 and £170 a year, respectively.
While most UK mortgage holders are on fixed-rate deals, more than 1.6 million will expire in 2025. Many borrowers who locked into two-year fixed rates in 2023, averaging 5.06%, may now have the chance to remortgage at more favourable terms, and those who are property traders or investors, this could provide them with the appetite for further investment.
Though the average fixed rate remains around 4.6% (Rightmove, 2025), some lenders have already begun offering new deals as low as 3.84% (HSBC, which could mean substantial savings for buyers planning to purchase through our auction.
Opportunity in Uncertainty
The BoE’s move also reflects concerns around the global economy, particularly following recent US trade tariffs. These tariffs will dampen UK export demand and reduce GDP growth from 1.5% to 1.25% by 2026. In response, cutting interest rates is seen to encourage domestic investment and spending.
Chancellor Rachel Reeves hailed the rate cut as a positive step for consumers and the housing market:
“This interest rate cut is welcome news… making homeownership more accessible, car finance more affordable and easing the pressure on those paying off personal loans.” (The Sun, May 2025)
What It Means for Our Buyers
With borrowing costs falling and inflation cooling, buyers in our May auction are uniquely positioned to take advantage of this changing landscape. Whether you are a landlord seeking to expand your portfolio or a first-time buyer exploring cost-effective routes onto the property ladder, this environment offers new advantages.
Our May catalogue offers a wide range of properties, from London flats with strong rental potential to development sites and family homes, suited to various budgets and objectives.
Our next live-streamed auction will take place on May 28th and 29th. With mortgage rates set to become more manageable, now is the perfect time to act.
Explore the May Auction Catalogue here, with new lots added throughout the marketing window https://www.auctionhouselondon.co.uk/current-auction