How many more Bank of England rate cuts are brokers expecting this year?

Mortgage brokers are now anticipating fewer interest rate cuts this year after the latest inflation figures surpassed forecasts, according to research by buy-to-let lender Landbay.

During a recent webinar introducing its product transfer service, Landbay surveyed 105 mortgage intermediaries on their outlook for interest rates. The poll came shortly after the Office for National Statistics (ONS) reported that annual inflation rose to 3% in January, up from 2.5% in December — exceeding analysts’ projections.

When asked by Landbay how many 0.25% base rate cuts they expect in 2025, 54% of brokers predicted two cuts. Only 14% believed three cuts were still achievable by year-end, while 26% forecast just one cut.

Meanwhile, 4% of respondents said they expected no further reductions, leaving the base rate at 4.5% by the end of the year. In contrast, 2% held an optimistic view, forecasting a drop to 3.5%.

“The Bank of England has warned inflation could hit a fresh peak of 3.7% later this year,” said Rob Stanton (pictured), sales and distribution director at Landbay. “While much of this is down to high energy costs, some of it is down to the government’s introduction of VAT on private school fees which has pushed overall inflation in the education sector to its highest point in nearly a decade.

“Transport costs are also rising with the bus fare cap increasing to £3. And food is getting more expensive, some of which is down to the packaging tax – that’s putting a renewed squeeze for households.”

He added that cutting rates while inflation remains significantly above target would be a “very bold move,” especially as rising business costs — including a £25 billion increase in employer national insurance contributions and a 6.7% minimum wage hike — are likely to push prices higher.

According to Stanton, brokers should advise landlords that interest rates are likely to remain elevated for longer than previously expected.

“Brokers can’t see the future obviously, but the wisdom of crowds does give us some insight here and suggests that, when they’re talking to landlords, brokers should make it clear that the interest rate landscape has changed,” he pointed out.

“The Bank of England is going to have to change its priorities in face of rising inflation and keep interest rates higher for longer. It’s well known that timing can make or break a deal in BTL, making broad product choice, easy application and fast decision making even more valuable to both brokers and landlords in such changeable market conditions. No matter the path of future interest rates, this has to remain a priority for lenders.”

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