The Bank of England’s decision to cut the base rate to 3.75% marks a clear change in direction after a prolonged period of rising borrowing costs. While this adjustment will not lead to immediate shifts in the housing market, it does change the financial backdrop against which property decisions are made.
For buyers, homeowners and landlords, the focus is now less on coping with continual rate increases and more on reviewing affordability and planning. As we move towards 2026, this change provides a more stable basis for considering next steps, whether that involves buying, selling, remortgaging or reviewing a rental strategy.
Related: Northwood’s Budget 2025 property update for landlords and homeowners
Why the base rate still matters
The base rate influences the cost of borrowing across the economy. In property terms, it affects:
- Mortgage pricing and product availability
• Monthly repayment levels for some borrowers
• Buyer affordability
• Landlords’ finance costs
When the base rate falls, lenders usually adjust mortgage rates gradually rather than all at once. Over time, this can reduce borrowing costs and support steadier activity across both sales and lettings markets. This cut is widely seen as a move away from a restrictive rate environment and towards greater stability.
What landlords should review now?
For landlords, the impact of a base rate cut depends on the type of mortgage and the timing of any remortgage.
Those on tracker or variable rate mortgages may see small reductions in repayments, helping to improve month-to-month cash flow. Landlords approaching a remortgage may also find lending conditions becoming more competitive if rates continue to ease into 2026.
However, finance is only one part of the picture. Regulatory change, maintenance costs and local rental demand all affect returns. This makes it a sensible time to review overall risk, income reliability and management arrangements, not just interest rates.
What homeowners with a mortgage should consider
Homeowners on tracker or variable-rate mortgages may notice modest changes to their repayments. Those on fixed-rate deals will not see any immediate difference.
Even so, the direction of travel matters. If your fixed rate ends in the next six to 12 months, reviewing options early can give you more choice and reduce pressure later. This also helps with wider planning if you are considering moving, refinancing or adjusting household budgets.
What buyers may need to factor in
Lower borrowing costs can improve affordability over time, making monthly repayments easier to manage for some buyers.
This is unlikely to lead to a sudden increase in demand. A more likely outcome is a steadier market in 2026, where buyers take time to compare options and focus on long-term value rather than rushing decisions.
Preparation remains important. Buyers who understand their budget and borrowing position are better placed to move when the right property becomes available.
What sellers could notice as conditions settle
As affordability improves, buyer enquiries often become more consistent. This can support transaction levels even if price growth remains measured.
For sellers, this type of market continues to reward realistic pricing, good presentation and a clear understanding of local demand. If selling is part of your plans for 2026, an early valuation and a clear strategy can help with timing and next steps.
Related: How to Find Homes for Sale Near You: A Practical Step-by-Step Guide
What 2026 could look like if rates ease further?
Further base rate cuts are possible, although the pace will depend on inflation and wider economic conditions. If borrowing costs continue to reduce gradually, this could support:
- More stable mortgage pricing
• Steadier buyer and seller activity
• A more predictable planning environment for landlords
Key takeaway: whether you are buying, selling, remortgaging or reviewing a buy-to-let strategy in the next six to 12 months, starting early gives you more time to compare options and act when it suits you.
Related: Possession grounds and the Renters’ Rights Act: what landlords need to know from May 2026
Why this base rate cut matters
This base rate cut matters because it allows property decisions to be made with a clearer financial backdrop. While it does not remove every challenge in the market, it does help reduce uncertainty and improve planning conditions.
Property markets are shaped locally. Northwood can help you understand demand in your area, realistic pricing and rental levels, and the options available based on your circumstances.
Looking ahead to 2026, taking time now to review your position can help you make more informed decisions later.
