British high street lenders, including Barclays, Halifax, HSBC, and NatWest, have been quick to respond to the Bank of England’s recent interest rate cut by slashing borrowing costs. This move has resulted in five-year fixed-rate mortgages being offered at under 4%, which is below the BOE’s key rate of 5%. According to a report from property portal Rightmove, the best five-year fixed rate currently stands at 3.83% for buyers with a 40% deposit.
Impact of Economic Conditions
The improving economic environment in the UK, coupled with the political certainty following the July general election, has led to an immediate upturn in buyer activity. Rightmove reported a 19% increase in the number of house hunters contacting estate agents for viewings compared to a year ago. Additionally, the number of new sellers entering the market has risen by 5% this month.
Tim Bannister, Rightmove’s director of property science, noted that while the rate cut has brought only minimal relief to struggling homebuyers, it has had a positive impact on home-mover sentiment. He expects activity to further increase as mortgage rates continue to head downwards. Rightmove has revised its earlier prediction of a 1% fall in seller asking prices to now anticipate a 1% increase in 2024.
The Bank of England is scheduled to meet on September 19 to make a new interest rate decision. Market data shows that there is a 37% chance of a rate cut in September, with expectations rising to 74% for November. Many buyers are closely watching the outcome of this meeting for signals on the future path of mortgage rates. Peter Gettins, product manager at L&C Mortgages, believes that another base rate cut in the coming months could further boost confidence among buyers.
The recent interest rate cut by the Bank of England has resulted in a significant decrease in mortgage rates offered by UK lenders. This has led to a surge in buyer activity, with more house hunters contacting estate agents for viewings. While the rate cut has brought some relief to struggling homebuyers, the true impact may only be felt in the months to come as mortgage rates continue to trend downwards. The upcoming BOE meeting in September will be crucial in determining the future direction of mortgage rates in the UK market. Buyers and sellers alike will be closely monitoring the outcomes of this meeting to make informed decisions regarding their property investments.