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Impact of Q1 growth on base rate and mortgage pricing

ended 15. May 2025

UK gross domestic product (GDP) is estimated to have grown by 0.7% in Quarter 1 (Jan to Mar) 2025, following growth of 0.1% in the previous quarter, according to the ONS. The consensus was growth of 0.6%. Newspage asked brokers for their views on how this might impact the base rate and mortgage pricing (swap rates). Views below.

5 responses from the Newspage community

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Craig Fish
Director at Lodestone Mortgages
At the start of the year, markets were betting on multiple cuts and cheaper mortgages. We got a glimpse of that when swap rates dropped during the trade war turbulence, but momentum has now fizzled. Lenders have already priced in a lot of the optimism and now they’re pausing to see what happens next. If strong growth continues into Q2, we may see the Bank of England delay any rate cuts, keeping mortgage pricing stable but sticky. No fireworks for now, but no shocks either. And in this market, that kind of stability might just be what borrowers need. All eyes on the next set of data because that’s where the next move will be decided.
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Ken James
Director at Contractor Mortgage Services
The uplift in GDP growth in Q1 2025 suggests the UK economy is regaining momentum. This has important implications for Bank of England base rate expectations and mortgage pricing via swap rates. A stronger economy gives the BoE more confidence that inflation risks haven't fully disappeared. It reduces the urgency to cut rates, especially if inflation is still sticky or above target. The importance of consistent growth cannot be underplayed The Monetary Policy Committee (MPC) is heavily data-driven. If upcoming inflation and wage data also show resilience, a base rate cut in the near term may become less likely.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
Many have been expecting more cuts this year and while another reduction in the base rate is still likely, we may not get the flurry of cuts that were expected just a few weeks ago as the trade war raged. Mortgage pricing may well start to bottom out for the time being, and brokers will be keeping an eye on swap rates and lender announcements in the days ahead.
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Justin Moy
Managing Director at EHF Mortgages
Given that the GDP data was broadly in line with expectations, the markets will be more interested in the Q2 figures, showing the impact of NI increases and tariffs in particular. Mortgage rate cuts may not be as prolific as some were predicting for the rest of 2025 but recent improvements should hold for now.
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Ben Perks
Managing Director at Orchard Financial Advisers
This is refreshing news and paves the way for further Base Rate cuts this year. If we maintain this rate of growth throughout Q2 we should see rates plateau and stabilise at a more acceptable level for the second half of the year.