The Bank of England trimmed the Base Rate to 4.00% on 7 August 2025, marking the third cut in the past year. Inflation remains elevated at 3.6%.
As a result, average two- and five-year fixed mortgage rates are now hovering around 4.49–4.51%, with two-year fixes at roughly 4.49% and five-year fixes at 4.50–4.51%, both slightly lower than last year.
Affordability is improving: typical first-time buyer mortgage payments have dropped from about £1,002 to £909 per month—a near £100 saving.
But don’t expect big leaps forward: Rightmove and their mortgage experts caution that rates are expected to remain “pretty much flat” for the rest of 2025, with only minor fluctuations likely
Property Market: Buyers Gaining the Upper Hand
Asking prices have slipped by 1.3% in August, down £4,969 to an average of £368,740—a typical summer dip, though slightly more pronounced this year
July marked the strongest month for sales since 2020, fuelled by more competitive pricing. Agreed sales are running approximately 8% ahead of last year, and housing stock is up by 10%—more choice equals more leverage for buyers
Looking back, July’s price drop of 1.2% was the steepest summer decline in over 20 years, although nationally, prices remain slightly up (~0.3% year-on-year)
Affordability continues to improve: two-year fixed rates have dipped from 5.34% to around 4.53%, saving buyers an average of almost £150 per month on a typical home
However, buyer demand has softened recently amid talk of impending tax increases and uncertainty over further rate cuts, potentially cooling market momentum
What This Means for JW Woods Clients
For Buyers:
Improved affordability—thanks to lower mortgage rates and more competitively priced homes—makes now an opportune time to enter the market.
Bargaining power lies with you: more listings and faster sale rates on well-priced homes (32 days vs. 99 for reduced-price listings) give buyers stronger negotiating leverage.
But don’t delay: while sentiment is positive, further rate cuts are uncertain, and market momentum may slow as autumn progresses
For Sellers:
Thoughtful pricing is key to capturing buyer interest—especially in a market where the average listing is down more than £10,000 compared to three months ago.
Well-presented properties are selling swiftly—62 days on average, and just 32 days if priced right from the start
Watch the incoming Budget and mortgage rate chatter closely—it could influence buyer confidence and urgency in the coming weeks