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UK Mortgage Rates Drop Below 4% Following Bank of England Rate Cut

The Bank of England’s 0.25% rate reduction to 4.25% has spurred widespread mortgage rate cuts, while US buyers face elevated rates as the Fed holds steady.

Overview

  • The Bank of England reduced its base rate to 4.25%, prompting major UK lenders to lower mortgage rates and reintroduce sub-4% fixed deals.
  • Tracker mortgage holders in the UK will save approximately £29 per month, translating to nearly £350 annually, due to the rate cut.
  • In the US, the Federal Reserve maintained its federal funds rate at 4.25–4.50%, keeping 30-year fixed mortgage rates near 6.90%, the highest in two months.
  • Many US homebuyers are delaying purchases as they await potential rate cuts later in 2025, with affordability remaining a significant barrier.
  • UK mortgage competition intensifies as lenders aim to attract borrowers with reduced rates, signaling renewed momentum in the housing market.