After several years of turbulence, the last 12 months have finally brought the first signs of calm to interest rates and the housing market. Inflation has fallen sharply from its peak, the Bank of England has started to cut rates, and while the property market is certainly not booming, it is beginning to look more stable and predictable.
For owners, buyers and investors across the West Midlands, the key questions now are: where will interest rates go next, and what does that mean for house prices and activity over the coming year?
The interest rate journey over the last 12 months
In late 2024, the Bank of England base rate was 4.75%, already down from the peak of 5.25% reached in August 2023. Since then, the Bank has delivered a series of measured cuts as inflation has eased and the economy has slowed.
November 2024: base rate at 4.75%
February 2025: cut to 4.50%
May 2025: cut to 4.25%
August 2025: cut to 4.00%
November 2025: held at 4.00%
Inflation, which had been well into double digits at its peak, is now running at about 3.8%, still above the Bank’s 2% target but moving in the right direction.
In short: we have moved from an emergency “put the brakes on” phase to a cautious “gently easing off” phase, with the Bank clearly alive to the risk of cutting too quickly and reigniting inflation.
What this has meant for mortgages and borrowing
Mortgage markets tend to move ahead of the Bank of England. Lenders began shaving fixed rates as soon as it became clear that base rate had peaked, and although costs remain higher than in the ultra-low rate era, the worst of the shock appears to be behind us.
Tracker and variable-rate borrowers have seen their payments ease slightly with each cut, while new fixed-rate products are now generally cheaper than they were 12–18 months ago.
For buyers, the combination of lower rates and a cooler market has improved choice. For existing owners, the picture is more mixed: the pressure is easing, but we are not going back to the days of 0.1% base rate.
The North Birmingham property market in 2025
Against that backdrop, the housing market has been surprisingly resilient.
Official Land Registry figures show that, as of August 2025, average house prices across the West Midlands were around £250,000, up 3.7% on the year.
Independent analysis puts the average property price in the wider West Midlands region slightly higher, at around £279,000, with prices up about 2% over the last 12 months, although transaction volumes are down by nearly 13%.
Nationally, the picture is similar: the UK House Price Index shows average prices up around 3% year-on-year, while Zoopla’s index reports a smaller rise of about 1.3% over the year to September 2025.
Demand, however, is patchy. RICS data for the West Midlands shows a negative net balance for new buyer enquiries in late summer, indicating that more agents are seeing a slight fall in demand than a rise.
At the same time, the rental market remains strong: in Birmingham, average private rents rose by just over 5% in the year to September 2025, supporting yields for landlords.
Where next for interest rates?
Looking ahead, most economists and market forecasters expect interest rates to edge down gradually. Recent commentary suggests there is a good chance of another quarter-point cut from 4.0% at the Bank’s meeting in December 2025, if inflation continues to cool.
Several major banks and research houses expect base rate to be somewhere in the region of 3.75%–3.25% during 2026, depending on how inflation and growth evolve.
For practical purposes, that means the next 12 months are likely to see:
A gently falling path for rates rather than a dramatic return to rock-bottom borrowing cost. A continued emphasis on affordability checks and sensible underwriting from lenders.
House price forecasts are always an educated guess, but most reputable forecasters now expect modest nominal growth over the next couple of years rather than big swings.
Here at Acres we are projecting low growth in 2026 of perhaps 2-4% eith stronger pockets where demand is resilient and stock is tight.
Transaction volumes remaining below long-run norms, but stabilising as rate cuts slowly improve affordability and confidence. Continued strong rental demand, supporting investor interest in well-located houses and family properties.
What this means for buyers, sellers and landlords
For buyers, the coming year may represent a window of opportunity. Competition is more measured, there is usually more choice than in a boom market, and the direction of travel for interest rates is gently downward.
For sellers, realism is key. The market is not in “panic mode”, but buyers are price-sensitive and have options. Well-presented, correctly priced homes in popular areas will still attract strong interest, but ambitious over-pricing is more likely to lead to stagnation. Flexibility on timing and negotiation will remain important.
For landlords and investors, the picture is cautiously positive. While higher rates have squeezed some highly leveraged landlords, easing borrowing costs combined with firm rental growth should improve net yields over time. Demand for quality rental property in and around Birmingham and the wider West Midlands remains robust, particularly for good family homes and properties near transport links and employment hubs.
Are you considering moving home? If you would like to discuss selling your home, please get in touch with us This email address is being protected from spambots. You need JavaScript enabled to view it. or call any of our busy, helpful teams / offices :
Four Oaks 0121 323 3088
Sutton Coldfield 0121 321 2101
Walmley 0121 313 2888
Great Barr 0121 358 6222
Lettings 0121 312 4997
Mortgages 0121 387 1616
Thank you for reading this article, and your interest in Acres and our property for sale.
Nigel & Jayne Deekes – Acres Partners
