A reduction in base rate to 3.75% will stimulate market activity and drive growth into 2026.
After a disappointing hold in the base rate in November, the Bank of England has now voted in favour of dropping the rate by 0.25% to stand at 3.75%, its lowest level in three years.
Despite weakening economic growth, the cut was largely expected thanks to a softening labour market and a larger than expected drop in inflation in November. Nevertheless, it took a knife-edge decision to break the recent trend of holds.
It is now hoped that the decrease will go on to provide the market with a much needed shot of confidence.
Oliver Prior, National Commercial Director of Auction House, has warmly welcomed the decision: “Following the lacklustre Budget announcement and the Monetary Policy Committee’s (MPC) decision to hold the base rate in November, it now looks as though our festive wishes are being answered.
“The reduction in the Bank of England’s (BoE) base rate is truly great news. In the face of a more heavily regulated and fiscally restrictive environment, a more positive economic outlook is all we can wish for.”
Until now, sticky inflation has forced the MPC to adopt a more cautious approach when it came to management of the base rate, leading to a slower than expected run of reductions from the start of the year. But the MPC is now ready to adopt a more proactive approach and Oliver Prior believes this latest cut will spark some life back into the sector: “The BoE’s decision to trim the rate by 0.25% is modest but will renew confidence. Lenders have responded to this in anticipation with a reduction in interest rates, bringing buyers back into the market who were previously priced out.
“A rise in the number of buyers will create a more dynamic and active transactional environment, leading to market growth and development in early 2026.”
The possibility of further cuts to the base rate early next year will also support the market’s building momentum. Although the cuts are likely to be small, reductions in February and March will help to make the market an even more favourable environment.
“The forecasting of additional base rate reductions in the new year will build on this positive momentum and carry us through the course of 2026,” commented Oliver Prior. “Lowering the cost of debt will encourage activity and market growth, something both buyers and sellers will celebrate after a tough year.”
The move will certainly add yet more buoyancy to the auction sector, which has proven to be resilient despite uncertain market conditions. For instance, Auction House has recently celebrated a hugely successful year with sales of over £850 million in 2025, a new benchmark in the company’s history.
“The speed and security of auctions are providing both buyers and sellers with an ideal route into the property market," said Oliver Prior. “The short timeline between exchange of contracts and completion, which is typically 20 working days or fewer, gives buyers and sellers confidence – confidence that will only grow now that the BoE has made its first base rate cut since August 2025.”
Find out more about us
If sellers would like to find out more about selling their land or property at auction, they can book a free, no-obligation valuation. Buyers can also search our site to view all the properties currently available.
