The recent interest rate cut by the Bank of England has had a significant impact on mortgage rates in the UK. Major lenders such as Barclays, Halifax, HSBC, and NatWest are now offering five-year fixed-rate mortgages below 4%, which is lower than the BOE’s key rate of 5%. This move has sparked a boom in homebuyer activity, leading to increased interest from buyers and sellers in the housing market.
The improving economic environment, coupled with the political certainty gained from the UK’s July general election, has led to an immediate upturn in buyer activity. House hunters contacting estate agents for viewings have increased by 19% compared to the previous year, highlighting the positive effects of the interest rate cut on the housing market. Additionally, the number of new sellers coming to the market rose by 5% this month, indicating growing confidence among homeowners.
According to Tim Bannister, the director of property science at Rightmove, the rate cut has brought some relief to struggling homebuyers. While mortgage rates have not seen a substantial decrease following the rate cut, the overall sentiment among homebuyers is positive. Bannister expects activity in the housing market to pick up further through the autumn as more buyers take advantage of the lower mortgage rates.
Rightmove now predicts that new seller asking prices will rise marginally by 1% in 2024, a revision from its earlier forecast of a 1% fall in prices. The upcoming BOE meeting on September 19 will be crucial in determining the future path for mortgage rates. Market data suggests a 37% chance of a rate cut in September, with expectations rising to 74% for November. Buyers are closely watching the outcome of the meeting for signals on potential changes in mortgage rates.
Peter Gettins, product manager at L&C Mortgages, noted that many buyers are waiting to see if rates will come down further before making a decision. Another base rate cut in the next few months could further boost confidence among homebuyers and lead to increased activity in the housing market. The anticipation of potential rate cuts is influencing buyer behavior and driving interest in purchasing property.
The interest rate cut by the Bank of England has had a significant impact on mortgage rates in the UK. Lower fixed-rate mortgages are attracting more buyers to the market, leading to increased activity among both buyers and sellers. The overall sentiment in the housing market is positive, with expectations of further rate cuts in the coming months. As the market continues to respond to changes in interest rates, homebuyers are likely to benefit from favorable borrowing conditions and increased affordability in the housing sector.