Frances Haque, Chief Economist at Santander UK responds to the Bank of England's base rate decision

19 June 2025

Frances Haque, Chief Economist, Santander UK comments:

"As expected, base rate has been held at 4.25%. Despite the anticipated hold, we have seen many lenders cutting mortgage lending rates in the last week – Santander included. Our forecasts suggest that we’re still likely to see two more base rate cuts over the coming year – most likely ending 2025 at 3.75% – with this being “priced in” to current mortgage rates.

“Aspiring homeowners and those already on the ladder could expect to see mortgage rates continue to hover between the top end of the threes or lower end of the fours. For this to change significantly we’d need to see changes in economic data – and as ever, that could see mortgage rates go up as well as down.

“We saw strong growth in Q1 followed by April’s GDP data showing a fall of 0.3% month-on-month. As has been the trend for the last few years, risks to the outlook remain there is the potential for rising oil prices on the back of the crisis in the Middle East and increased market volatility. Further loosening in the labour market with unemployment increasing to 4.6% and wage growth falling a little more than expected has also been seen, but wage growth is still significantly above rates compatible with a 2% inflation target.

“While these may pose bumps in the road for buyers, the traditional increase in home moving we see during the summer will likely continue to drive demand for properties as we enter Q3 which, coupled with affordability improvements, means we expect the 2025 mortgage market will continue to grow.”