The BoE holds – but the bigger picture is still unfolding.

The Bank of England has held base interest rates at 4.5%, a move that was widely expected following the January rate cut.

While markets anticipate a reduction in May, the reality is that lenders do not move in perfect sync with the BoE—given there are a number of other key decisions and data points that drive the market.

But March—perhaps this one especially, given wider socio-economic volatility, key decisions from the Bank of England, The Office for Budget Responsibility, and The Government’s Spring Budget—feels like a key battleground when it comes to property investment strategy in 2025.

At the same time, there is uncertainty over how deep or frequent future cuts will be. Financial markets are currently pricing in just one further rate cut of 25bps this year, while many economists still expect 25bps cuts each quarter. If the latter is correct, we could see base rates at 3.75% by 2026.

All of this means the real focus for borrowers and investors now should be on when, where, and how to borrow, rather than simply waiting for rate cuts to happen. For example, for those borrowers with immediate refinancing needs, an ERC-free discounted tracker may look attractive.

What the Announcement Means for Borrowers

The question isn’t really just about today’s decision to hold the interest rate unchanged, or even when rates will next move, but how different types of lenders will respond over the coming months—and what that means for financing decisions today.

When, Where and How to Borrow

Market expectations are firmly set on a May rate cut, and while the BoE has opted to hold rates steady, lenders will adjust their pricing at different times based on their funding models and risk appetite. But this isn’t automatic—lenders will be watching:

• Swap rates – These determine funding costs for lenders and act as a leading indicator of where mortgage rates will trend. Bank macro hedges have been in the money which may mean the high street moves first. 
• Global market stability – Stock market movements, central bank actions, Government announcements, and inflation data all influence lender confidence. And at a time when there is global socio-political instability—ranging from US trade policies to European fiscal concerns—index movements tend to be less predictable and more volatile, impacting wider financial markets.
• Labour market pressures – With National Insurance increases set to take effect in April, there is concern that weakened private sector labour demand could slow economic growth, potentially reinforcing the case for further rate cuts later this year.

Borrowing Considerations

• If you need property finance today – A bridging loan or ERC-free discounted tracker could offer flexibility, allowing borrowers to ‘product transfer’ later into a longer-term deal once borrowing conditions improve. However, not all lenders will offer the same refinancing options, so understanding lender policies upfront is key.
• If your mortgage is up for renewal in the next 6 months – Some lenders will move immediately to cut their rates, while others may hold firm or adjust more gradually, depending on their funding costs and risk appetite. While further reductions could still come, borrowers should be weighing up whether locking in a new deal now offers enough benefit in exchange for certainty, versus if there’s room for further rate improvements before committing, with the risk back drop heightened. Tracking lender movements and ensuring flexibility to switch if better terms emerge remains key.

Now may a good time to speak to a mortgage broker. With access to a wider range of lenders, brokers can spot early rate adjustments, compare deals, and identify flexible refinancing options. As lenders react at different speeds, expert guidance can help secure the best financing strategy.

What Investors Should Be Watching

For property investors, the focus isn’t just on interest rates—it’s on how the broader market is shifting.

• More stock equals more negotiating power – UK property listings are at their highest level in years. This gives investors an opportunity to negotiate stronger deals now, before market sentiment shifts.
• The window for low-competition deals is shrinking – If borrowing conditions improve later this year, buyer activity could increase, making it harder to secure discounts from motivated sellers.
• Rental yields remain strong – While borrowing costs are still relatively high, rental demand remains robust. Investors looking for positive cash flow should focus on high-yield areas where demand is outpacing supply.

What’s the Smart Move for Investors?

• If you’re looking to acquire – Consider structuring deals with flexibility, allowing refinancing onto better terms once rates shift or if project work is needed prior to letting/living there.
• If you’re waiting for another rate cut – Balance the risk of waiting against the potential for increasing property prices later this year.

What Comes Next: Key Market-Moving Announcements on 26 March

While the most recent BoE decision was expected, the bigger picture for borrowing and property investment in 2025 will take shape next week. On March 26th, three major announcements—the Government’s Spring Budget, the OBR’s UK Economic Forecast, and the ONS’ Consumer Prices Index (CPI) update—are set to influence property finance conditions.

Spring Budget: Policy and Taxation Changes?

The Government’s fiscal strategy will determine whether property investors and homeowners face new incentives or additional costs. Potential areas to watch:

• Stamp Duty an Property Taxes – The Government could extend relief measures, adjust stamp duty thresholds, or introduce tax incentives to stimulate transactions and investment. Any changes here will directly affect affordability and liquidity in the market.
• Capital Gains Tax & Rental Market Reforms – There has been speculation that capital gains tax rates could be reviewed, potentially impacting landlords and buy-to-let investors. The Government may also announce policies affecting tenant protections and rental yields.
• Housing & Planning Initiatives – Proposals to increase housing supply, ease planning restrictions, or incentivise development could influence investment opportunities and property prices.

OBR Economic Forecast: What it Means for Borrowing Costs

The OBR’s economic outlook will shape expectations for interest rates, inflation, and public spending.

• If economic forecasts weaken (i.e., slower growth, rising unemployment, or weaker investment confidence), this could reinforce expectations for further BoE rate cuts beyond May as the Bank looks to stimulate borrowing and economic activity. Equally, if financial markets belive that any fiscal plan is only credible on the basis of more government borrowing, this could lead to higher GILT yields. 
• If the forecast is stronger than expected, this could push back expectations for future rate cuts, meaning borrowing costs may stay higher for longer, but there could also be some offset if it also means that the government needs to borrow less as a result of higher tax revenue.

CPI Inflation Data: Will it Shift BoE Policy?

Inflation remains the key driver of BoE interest rate decisions, and the latest CPI data will indicate how quickly inflation is cooling.

• If inflation continues to decline, it will support expectations for further rate cuts later this year, encouraging more lenders to start lowering mortgage and property finance rates.
• If inflation remains stubbornly above market consensus, the BoE may delay or slow future rate reductions, meaning mortgage rates could stay elevated for longer. Lenders may also take a more cautious approach to pricing, waiting for clearer signals before passing on savings to borrowers.

Stay Ahead of the Market Shifts

These announcements could set the tone for property investment in 2025—from borrowing costs to housing supply and fiscal policy. For investors and borrowers, the key isn’t just reacting to what happens next week but understanding how these factors combine to shape the market in the months ahead.