Should I buy a house now? How lower interest rates could make it the right time 

Summary: Thinking of buying a house? The Bank of England has cut the base rate from 4.00% to 3.75%. Mortgage rates are likely to drop as a result, making monthly mortgage payments more affordable.  

For first-time buyers and home movers, this could be a great time to buy a house. But remember, buying a home involves more than just interest rates. You’ll need to consider your savings, deposit, property condition, legal fees, and other costs. 

Key takeaway: If your finances are in order and you find the right property, it could be one of the most affordable times to act in recent years. 

If you’re wondering whether now is a good time to buy a home, you’re not alone. The Bank of England has reduce interest rates on the 18^th December 2025, causing many prospective buyers to take a fresh look at the market.  

Lower base rates often encourage lenders to reduce their mortgage rates, which can make monthly repayments more manageable and long-term borrowing more affordable. 

In fact, some mortgage lenders have already been cutting their rates in advance of the BoE’s announcement, to help them capture the increased movement in the property market. 

As one of the UK’s biggest conveyancing firms, we see first-hand how financial shifts affect the property market.  

Here’s our expert view on why the answer to ‘should I buy a house now?’ may be yes, as well as some other key considerations to help you make a confident decision. 

What is the Bank of England base rate? 

The Bank of England (BoE) base rate is the rate the BoE charges banks when they borrow money, acting as the benchmark for UK interest rates.  

Banks then use it as their starting point for interest on their own products, including mortgages, credit cards, savings accounts and loans. 

Why is the Bank of England cutting interest rates? 

It’s been widely reported that the Bank of England’s decision to cut interest rates for a final time in 2025 was due to weak economic performance.  

A cut to interest rates makes spending (including taking out a mortgage) more attractive and saving less attractive, therefore boosting the economy.  

How do lower interest rates impact homebuyers? 

When interest rates fall, mortgage products tend to follow. This can benefit buyers in several ways: 

1. Reduced Monthly Payments 

Lower rates can mean lower repayments. This means those taking out a new mortgage can enjoy lower monthly payments than expected, and those remortgaging may see their monthly payment go down if they took their current mortgage out when interest rates were higher.  

2. Increased Borrowing Power 

With lower monthly payments, you may be able to borrow slightly more, or secure the same property with a lower overall cost. 

3. Improved Long-Term Affordability 

Even a small reduction in interest rates can make a significant difference over a 25 or 30-year mortgage term. Any interest paid on your mortgage is paid to the bank and doesn’t pay off the principle balance (the money borrowed for the cost of your home minus the interest).  

So, the lower your mortgage rate, the less interest you pay and the quicker you may be able to pay off the balance.  

4. Renewed Market Activity 

When mortgages become more affordable, the property market often becomes more active, creating opportunities for buyers. 

While no one can guarantee future rate movements, today’s environment may offer a good window of opportunity to secure a competitive mortgage deal. 

Is now a good time to buy a home? 

For many buyers, the answer is yes, as long as the property and mortgage are right for your circumstances.  

It’s expected that we’ll soon see increased activity in the property market, especially from those who postponed buying while rates were higher, in combination with those who were waiting to see what was announced in November’s Autumn Budget. 

So, if you’ve been waiting for improved affordability, now could be a good time to take advantage of lower mortgage rates (meaning lower monthly payments) and get ahead of a potential increase in buyer activity which could mean more competition to secure your dream home in the near future. 

What can you expect from Setfords?

• More time, more attention: With no targets, Setfords lawyers can dedicate more time to you.
• Ultimate flexibility: Our lawyers can tailor their schedules to meet your needs.
• Nationwide coverage: with hundreds of consultant lawyers across the UK, we’ll connect you with the right expert.
• Dedicated specialist legal partner: work directly with your chosen lawyer from start to finish. 
• Highly experienced: Setfords lawyers have an average of 20 years’ experience, so you can be assured you’re in safe hands.
• Capacity-based allocation: our lawyers never take on more work than they can handle, so you get the focus and attention you deserve.

Get a conveyancing quote

Are mortgage rates definitely going down?  

It’s expected that most mortgage rates will fall, in line with the Bank of England’s interest rate cuts. In fact, several lenders have already begun cutting rates on their mortgage products.  

However, not every mortgage product is the same. It’s important to shop around for the best deals for your situation and consider working with a mortgage advisor to help you find the right one for you.  

It’s important to get professional advice before taking out any mortgage to ensure you’re getting the best product for your circumstances.  

I’m a first time buyer, should I buy a house now? 

Buying your first home can feel overwhelming, especially when the market is changing. But, now is a particularly positive for first-time buyers: 

Lower Rates = Lower Barriers 

Reduced mortgage rates can make the jump from renting to owning more achievable, as your monthly payments will be more affordable.  

Indeed, data from Lloyds suggests that now is the most affordable time for first time buyers in a decade. 

So, if you’re looking to take your first step on the property ladder, the market is working in your favour. Working with an experienced conveyancer is crucial to help avoid delays and get you moved into your first home even sooner. Contact us for a quote today – our time to completion is 4 weeks faster than the industry average. 

FAQs: 

What else should I consider before I move?  

Even in a favourable market, buying a home is a big decision. The best time to buy a house depends on your personal circumstances. Here’s a few important factors to think about: 

1. Your Financial Stability 

Consider your savings, job security, and ability to manage future rate changes if you choose a variable product. 

2. Property Condition 

A survey can highlight potential issues early, helping you avoid unexpected expenses. 

3. Associated Costs 

Don’t forget to budget for: 

• Stamp Duty (if applicable) 
• Legal fees – click here to get a quote for your conveyancing 
• Mortgage arrangement fees 
• Survey fees 
• Moving expenses 

4. Your Long-Term Plans 

Think about whether the property suits your expected lifestyle over the next several years. Moving sooner than planned can be costly. 

5. Market Conditions in Your Area 

Local markets vary. Our team can help explain what’s happening in your region and what buyers should be aware of. 

Will mortgage rates fall in 2026? 

It’s currently impossible to say whether mortgage rates will fall further in 2026. It’s largely dependent on whether the Bank of England cuts interest rates again.  

The 18^th December cut is the last one for 2025, but rates may be cut again in 2026 depending on economic conditions. However, there is also a chance that rates will stay the same or even rise. So, if you’re ready to move now, you may not want to wait and see whether rates will fall even more. 

Will house prices go down because of lower interest rates? 

Lower mortgage rates typically boost demand, which can support or increase property prices. If you find a property you love at a price you’re willing to pay, waiting for a major drop may not be realistic. 

Is it risky to buy a home now? 

Every home purchase involves risk, but lower interest rates often make borrowing more manageable. A mortgage adviser can help you assess whether now fits your circumstances. 

Do first-time buyers benefit the most from reduced rates? 

Not necessarily: most homebuyers benefit from reduced mortgage rates, whether they’re first time buyers or home movers. However, lower mortgage costs often make the first step onto the property ladder more achievable, making the property market more accessible for first time buyers. 

I am already a homeowner, will the fall in mortgage rates affect me? 

If you already own your own home with a mortgage, your monthly payments will stay the same, unless you are on a tracker or variable rate mortgage. The monthly payments on these types of mortgages go up or down with the base rate, so they are likely to decrease as mortgage rates go down. It may take some time for the change in rate to be applied, typically up to a month.

If you have a fixed-rate mortgage, your payment will not change. However, if it is time for you to remortgage, your monthly payment likely will change when you do so. Whether it goes up or down will depend on the current rate of your mortgage. If your current deal is due to end in the next three to six months, now could be a good time to start looking for a new one.

If your new rate is higher than your current rate, you will likely pay more monthly. If your new rate is lower, you will likely pay less.  

Remortgaging soon? Don’t forget, you’ll need a solicitor to help with the legal process. Click here to get in touch.

Why is my mortgage rate higher than the Bank of England base rate? 

The Bank of England base rate is used as a starting point for banks to charge interest on their own products. They typically charge more interest than the base rate, and this additional margin is used to cover their costs. 

What happens if interest rates rise again? 

If interest rates rise, the impact on your mortgage depends on the type of product you have. 

If you have a fixed-rate mortgage, your payments will stay the same until the end of your fixed term. However, when you go to remortgage, the higher interest rates could mean higher monthly payments. 

If you have a tracker or variable rate mortgage, your payments will rise as the interest rates rise, as these mortgage types are typically tied to the Bank of England’s base rate. 

What does the mortgage rate drop mean for my savings?

Interest rates are cut to encourage spending over saving. A rate cut means you’ll earn less interest on your savings. It may be a good time to review where your money is held, whether it’s still working for you and if a suitable product with a better interest rate is available.

Thinking of Moving? We’re Here to Help 

Buying a home is one of the most important decisions you’ll make, but you don’t have to navigate it alone. With interest rates easing and mortgage affordability improving, now could be an excellent time to take the next step and get ahead of other buyers looking to take advantage of improving market conditions. 

Whether you’re a first time buyer or home mover, our experienced conveyancing team is ready to guide you through the process with clear advice, friendly support, and expert handling of the legal process. 

Instructing your conveyancer as soon as possible can help avoid delays and ensure a seamless process from start to finish. Even if your offer’s not been accepted yet, get in touch so we can be ready to go when you are. 

Contact us today for a no-obligation quote or to discuss your plans.