The Bank of England’s decision to hold the base rate at 3.75% comes as no surprise. Following the cut in December and with inflation still running hotter than the Bank would like, a pause was widely expected. What’s more important is the direction of travel, and we still expect rates to edge down gradually over the course of the year.
The market has started the year on a far more stable footing, with buyers returning as confidence improves and mortgage rates settle at levels lower than last year. Intense competition between lenders has been a real positive, expanding mortgage choice and giving buyers greater flexibility. This increased choice is particularly beneficial for first-time buyers taking their initial step onto the property ladder.
While affordability remains a stretch for many, lower mortgage rates combined with rising incomes mean mortgage costs as a share of income are at their lowest for several years. At the same time, a growing supply of homes is giving buyers more choice and keeping prices in check. This sets the foundations for healthier transaction levels into 2026, provided sellers price realistically and reflect local market conditions.
In the South West in particular, we’re seeing steady demand across all sectors of the market, from first-time buyers to downsizers and lifestyle movers. Well-presented, sensibly priced homes continue to attract strong interest, and agreed sales volumes are improving month on month.
Stability is exactly what the housing market needs. With greater certainty around borrowing costs and lenders keen to compete for business, both buyers and sellers can plan with more confidence. If rates ease further as expected, we anticipate a busier second half of the year and a more balanced, sustainable market overall.
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