The recent interest rate cut by the Bank of England has resulted in a significant decrease in mortgage rates offered by major high street lenders in the UK. Lenders like Barclays, Halifax, HSBC, and NatWest are now providing five-year fixed rate mortgages below 4%, which is lower than the BOE’s key rate of 5%. This shift in mortgage rates has been a direct response to the cut in interest rates, aiming to stimulate homebuyer activity in the market.
Following the interest rate cut, there has been a noticeable increase in buyer activity in the UK housing market. The improving economic environment and the political certainty post-election have led to an immediate upturn in buyer interest. According to a report by property portal Rightmove, there has been a 19% surge in the number of house hunters contacting estate agents for viewings compared to the previous year. Additionally, the number of new sellers entering the market has also risen by 5% in the same period.
Positive Sentiment Among Homebuyers
Despite the modest decrease in mortgage rates post the interest rate cut, there is a sense of relief among struggling homebuyers. Tim Bannister, Director of Property Science at Rightmove, mentioned that while the decrease in rates may be minimal, the sentiment among homebuyers has improved. The long-awaited rate cut has instilled confidence in the market, with expectations of further activity in the coming months.
Market Predictions
Rightmove has revised its earlier prediction of a 1% fall in new seller asking prices to an anticipated 1% rise in 2024. This shift in prediction reflects the positive outlook on the market post the interest rate cut. The upcoming BOE meeting in September will likely influence this trend further, with market expectations currently pricing in a 37% chance of another rate cut in September and a 74% chance in November.
Peter Gettins, Product Manager at L&C Mortgages, highlighted the significance of the upcoming BOE meeting on buyer behavior. Many potential buyers are waiting to see the outcome of the meeting before making a decision on mortgage rates. Another rate cut in the near future could potentially lead to a firmer confidence among buyers, driving further activity in the housing market.
Overall, the recent interest rate cut by the Bank of England has had a tangible impact on mortgage rates and buyer activity in the UK housing market. While the full extent of this impact is yet to be seen, the signs of positive sentiment among homebuyers and the rise in market predictions indicate a potential upturn in activity in the coming months.
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