The latest inflation figures from September showed a surprise drop to 1.7% – the first time since April 2021 that inflation has dipped below the Bank of England’s target of 2%. This data very much paves the way for earlier and more aggressive base rate cuts. Goldman Sachs is now predicting that the UK base rate will fall to 2.75% by Autumn 2025 following nine consecutive 0.25% rate cuts.

“Our findings suggest that Bank rate remains notably restrictive and – together with rapidly falling inflation and dovish MPC commentary – reinforces our view that the Bank of England will ultimately lower rates more than priced,” the investment bank said in a research note.

"Two-year mortgages are now available from 3.84% while the cheapest five-year mortgage is 3.68%"

The sooner the base rate comes down from its current level of 5%, the better for UK house prices. Analysts have observed that a base rate reduction of 1.5% to 3.5% could allow some mortgage borrowers to borrow up to 18% more, as stress testing affordability checks would then be relaxed. Lower rates would also boost the buy-to-let market, with the combination of record high rents with lower borrowing costs increasing profit margins for landlords.

Already there are many more affordable mortgage products available across the market, particularly for well-capitalised borrowers. Mark Harris of mortgage broker SPF Private Clients said: “Lenders continue to reduce their mortgage rates, which is encouraging buyers to make their move. Two-year fixes are now available from 3.84% while the cheapest five-year fix is pegged at 3.68%, which will prove to be more palatable for borrowers.”