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UK Interest Rates in 2025: What Homebuyers and Homeowners Need to Know

Writer's picture: Max PersellMax Persell


As of January 2025, the Bank of England's base rate stands at 4.75%, reflecting a series of adjustments aimed at balancing economic growth and inflation. In August 2024, the rate was reduced to 5% after holding at 5.25% for several months—the highest level in 16 years.


This downward trend is expected to continue, with forecasts suggesting the base rate could decrease to approximately 4% by the end of 2025. 


 These anticipated rate cuts are influenced by signs of a slowing economy, including contracting retail sales during the crucial Christmas trading period of December 2024. Such economic indicators have led traders to predict multiple interest rate reductions throughout 2025, potentially bringing the base rate down to 4% by year's end.


For homeowners and prospective buyers, these developments could result in more favorable mortgage rates, making it an opportune time to consult with mortgage brokers to explore refinancing or new mortgage options.

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