The Bank of England has cut interest rates for the third time in just under a year.
Policymakers at the Bank have opted to reduce interest rates to 4.5% today.
Rates sat at 4.75% after being cut by 0.25% points in November 2024. They were then kept the same in December.
Industry reaction:
Nick Leeming, Chairman of Jackson-Stops, commented: “While the Bank of England’s decision may not have been a surprise, it will certainly be welcomed. With expectations that there will be a series of incremental cuts to the base rate this year, this is a vote of confidence from the Bank of England in the markets more widely.
“While some economic volatility continues to weigh on the minds of decision makers, the Government’s staunch commitment to boosting growth alongside the ECB recently cutting rates – and the Fed expected to do the same – made the Bank of England’s decision a necessity.
“For buyers and borrowers, any cut to the base rate is a positive step, however the trickle down to mortgage rates may not be so immediate. There remains lots for prospective buyers to be positive about. Inflation is much lower than a year ago and the tide has now turned on interest rates, which will ease affordability in the mid- to long-term. We are still seeing a strong level of commitment to the market and sales progressing at the end of last year with confident pricing. We expect activity levels to persist with Stamp Duty changes in March motivating quick completions.”
Amy Reynolds, head of sales at Antony Roberts, said: “A rate cut helps the housing market hugely as it gives borrowers an affordability boost, filtering through to lower mortgage rates, which encourage activity.
“The Bank of England was widely expected to cut rates this month, and with borrowing costs remaining high compared to the pre-2022 norm, this is a welcome move.
“The stamp duty holiday has helped transaction levels with an increase in sales agreed in those chains where there is a first-time buyer keen to take advantage of the discount before the end of March. While this has been welcome, there is concern that once the stamp duty holiday ends, there will be a dip in activity and transactions, which is why this rate cut is so important.”
“The path of base rates is already priced into fixed-rate mortgages which account for the majority of new mortgages. It’s positive that 2025 is starting with lower mortgage rates than the last two years. The average 5-year fixed rate at 75% LTV is 4.4% while a two-year fix is at 4.6%.
“Greater stability in borrowing costs has brought more buyers and sellers back into the housing market having delayed moving decisions as rates spiked higher.”
Colby Short, co-founder and CEO of GetAgent.co.uk, commented: “The move to lower interest rates is no doubt the right one as inflation levels have remained broadly stable for some months now.
“We’ve already seen the mortgage industry react positively in anticipation of today’s news, as swap rates have fallen and many lenders have moved to lower the mortgage rates on offer.
“So whilst the property market may currently be benefiting from a minor surge in activity ahead of April’s stamp duty deadline, today’s decision should act as a further shot in the arm, although we expect the long-term picture to be one of more measured growth, with market momentum building gradually as the picture continues to improve.”
Verona Frankish, CEO of Yopa, added: “Despite the fact that interest rates haven’t fallen at the speed we expected, we’ve seen a strong and consistent level of buyer activity sweep the property market over the last year and, with a further reduction today, we expect this to remain the case as we look to the year ahead.
“Of course, mortgage rates currently remain far higher than today’s home movers have become accustomed to in recent years and so a degree of caution is advisable. However, we’re already seeing lenders react positively by reducing rates and we expect the picture to continue to improve over the course of the year where mortgage affordability is concerned.”
This article is being updated
Read the orginal article: https://propertyindustryeye.com/property-industry-reacts-to-bank-of-englands-decision-to-cut-interest-rates-3/
