May 6, 2025
If you’ve been following the property market, you’ve probably heard a lot about interest rates. But what do they actually mean for you as a buyer or seller—and how do they influence property sales?
Whether you’re buying your first home, moving house, or thinking of selling, understanding how interest rates affect the market can help you make smarter decisions.
What do interest rates mean?
Put simply, interest rates are the cost of borrowing money. When you get a mortgage, the lender charges interest on the amount you borrow. The Bank of England sets a base rate, which lenders use to set their mortgage rates.
When the base rate goes up, mortgages usually become more expensive. When it falls, borrowing tends to get cheaper. So, changes in interest rates directly affect how affordable a mortgage is, and how much buyers can afford to spend on a home.
Why do interest rates matter for property sales?
Interest rates shape buyer behaviour. When rates go up, mortgage repayments increase, which can reduce demand – especially among first-time buyers or those with tight budgets. This often leads to slower sales, longer time on the market, and in some cases, lower asking prices.
Lower interest rates, on the other hand, make borrowing more affordable. That usually drives up demand, increases competition between buyers, and gives sellers more room to negotiate on price.
What does this mean for buyers and sellers?
For buyers, higher interest rates can mean reassessing what’s affordable and delaying plans until rates come down. For sellers, it can mean adjusting expectations or being more flexible on price if demand softens.
If rates fall, buyers may be more motivated to act quickly, and sellers could benefit from faster sales and stronger offers.
Will mortgage rates go down?
According to recent reports, the Bank of England is expected to cut the base rate at the next meeting to 4.25% – the lowest since May 2023. Although a larger cut had been predicted, the Bank seems to be taking a more cautious approach to managing inflation.
If the rate cut goes ahead, mortgage rates are likely to drop too, making borrowing cheaper and potentially encouraging more buyers into the market.
Interest rates forecast
The direction of future rate changes will depend on factors like inflation and global economic conditions. If inflation stays under control, we could see further gradual rate cuts, which would likely have a positive impact on the housing market.
Interest rates play a key role in the property market, influencing both buyer demand and seller expectations. Staying informed about these changes can help you make better decisions, whether you’re buying, selling, or just weighing your options.
At Jacobs Steel, we’re here to guide you through every step of your property journey. Our experienced team can help you understand how the latest interest rate changes might affect your budget, your mortgage options, or the best time to list your property.
If you’re feeling uncertain about what you can afford or how to secure the best mortgage deal, we can also recommend trusted mortgage brokers and independent financial advisors who understand the local market and have access to a wide range of lenders.
Need advice on buying or selling? Contact Jacobs Steel today for expert property advice. Contact us to book a valuation or get an instant online valuation now.
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