We’re urging the Bank of England to cut interest rates, following the launch of our new report showing how a rate reduction could unlock vital investment to build more affordable homes and boost economic growth.
Our report - Cut to the Chase: The Bank of England must reduce interest rates - has been backed by the G15, which represents London’s largest housing associations, as well as the Northern Housing Consortium.
It sets out how high interest rates are damaging housing, construction, and the wider UK economy. We’re urging the Bank of England to rethink its cautious approach and reduce rates more quickly. Our report calls for decisive action - whether through a single large cut or a series of reductions - and a more forward-looking strategy that lowers rates at the right time to support investment and ease pressure on households and businesses.
Our CEO Nick Atkin, who authored the report, explains: "This isn’t just about housing, it’s about growth, jobs, and confidence. A decisive rate cut would give the economy room to breathe and provide the stability the housing sector desperately needs.
"Every month rates stay high means fewer homes and fewer people with a decent, affordable place to live.
"The Bank is chasing indicators it can’t control. Inflation isn’t high because we’re spending too much – it’s being driven by external shocks and supply issues. Keeping rates high won’t fix that, but it is stifling investment and housebuilding when we need both."
The report comes as the social housing sector carries more than £100 billion in debt, including £18 billion in short-term variable loans. We argue that even a modest cut in interest rates could instantly free up significant funds for investment:
- A 0.25% cut = around £45 million saved each year
- A 0.5% cut = £90 million released
- A 1% cut = £180 million freed up annually – enough to fund thousands of new homes or major regeneration projects
Ian McDermott, Peabody CEO and Chair of the G15, said: "As not-for-profit social landlords, we borrow for the long-term to pay for building and maintaining affordable homes.
"Faster and more decisive interest rate cuts would create substantial headroom for London’s largest providers, freeing up tens of millions of pounds and additional capacity to invest in new and existing homes and to help people in housing need.
"Action on rates would support housebuilding in the capital, driving economic growth for the country and boosting national productivity through maintenance and construction activity."
Patrick Murray, Executive Director at the Northern Housing Consortium, added: "We are hearing from a growing number of our members that higher interest rates are slowing down development, squeezing budgets and making it harder for them to invest in new and existing homes.
“Lower borrowing costs would enable social landlords to improve existing stock and help deliver the affordable homes communities urgently need.
"This report clearly outlines both the scale of the challenge and the kind of action that could help to unlock delivery on the Government's house building targets, at pace."
Read our report in full here: Cut to the Chase: The Bank of England must reduce interest rates