Could August Bring a Mortgage Break? Bank of England Hints at Rate Cut

A further interest rate cut could be just weeks away — and it may create fresh mortgage opportunities. Following four rate cuts since August 2024, the Bank of England has hinted at another potential reduction on 7 August 2025. With borrowing costs still elevated for many, this move could provide a turning point for homebuyers and remortgagers alike.

In June 2025, the Bank of England held its base rate at 4.25%, following earlier cuts in August, November 2024, and February and May 2025. But Governor Andrew Bailey has signalled that more “gradual and careful” reductions may follow — with the next decision due on 7 August. Many economists believe the Bank is preparing to ease rates again, particularly if signs of an economic slowdown persist. A rate cut could lead to lower mortgage rates over time — but timing and impact will vary depending on borrower type and product.

The Bank uses interest rates to control inflation, aiming to keep it close to a 2% target. While inflation has dropped from a peak of 11.1% in 2022, the latest figure for June 2025 stands at 3.6%, up slightly from the previous month. This slight increase hasn’t changed the broader outlook: most analysts still expect a cut in August. Mr Bailey has acknowledged that rates are “on a downward path,” but insists any move must be made cautiously — especially with global tensions and inflation pressures still in play. Some experts believe rates could fall to as low as 3.5% by mid-2026 — but this depends heavily on economic data in the months ahead.