The recent interest rate cut by the Bank of England has sparked a flurry of activity in the UK housing market. High street lenders, such as Barclays, Halifax, HSBC, and NatWest, have responded by slashing borrowing costs, particularly for fixed-rate mortgages. This move has led to increased buyer activity and a rise in new seller listings.
Following the Bank of England’s interest rate cut, lenders are now offering five-year fixed rate mortgages below 4%, which is lower than the BOE’s 5% key rate. The best five-year fixed rate currently stands at 3.83% for buyers with a 40% deposit. This is the lowest level seen since before the UK’s mini-Budget in September 2022. The reduction in mortgage rates has provided some relief to struggling homebuyers, with the expectation that activity will continue to increase in the coming months.
The improving economic environment and political certainty following the UK’s July general election have led to an immediate upturn in buyer activity. According to a report from property portal Rightmove, the number of house hunters contacting estate agents for viewings has increased by 19% compared to a year ago. This surge is a significant improvement from the 11% annual increase recorded in July. Additionally, the number of new sellers coming to market has risen by 5% compared to the previous year, indicating a growing interest in selling properties.
Rightmove projects that new seller asking prices will rise marginally by 1% in 2024, a positive revision from its earlier prediction of a 1% fall in prices. The upcoming BOE meeting on September 19 will determine if there will be further interest rate cuts. Currently, market expectations place a 37% chance of a rate cut in September, with anticipation rising to 74% for November. This uncertainty has many buyers closely monitoring the situation 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 next few months could bolster confidence among buyers. Many individuals may choose to hold off on making purchasing decisions until there is more clarity on the direction of mortgage rates. As the market continues to respond to the Bank of England’s actions, the outlook for the UK housing market remains uncertain but potentially promising.
The recent interest rate cut by the Bank of England has had a significant impact on mortgage rates in the UK. Lenders have responded by lowering borrowing costs, leading to increased buyer activity and a rise in new seller listings. While the future path of mortgage rates remains uncertain, market participants are closely monitoring upcoming BOE meetings for potential changes. The UK housing market is in a state of transition, with both challenges and opportunities on the horizon.