Today, the Bank of England announced a cut to the base interest rate, reducing it by 0.25% to 3.75%. This is the lowest rate seen in almost three years and reflects growing confidence that inflation is moving back under control.
So what does this mean for the housing market?
For buyers, this is welcome news. Lower interest rates can improve mortgage affordability, particularly for those on tracker or variable rate products. It can also help boost confidence for buyers who may have been waiting on the sidelines for borrowing costs to ease before making a move.
Homeowners with tracker mortgages may see a reduction in their monthly payments, which could provide some financial breathing room. While fixed rate mortgages will not change immediately, anyone due to remortgage in the coming months may start to see more competitive rates becoming available.
For sellers, lower interest rates tend to support demand. As mortgages become more affordable, the pool of active buyers can widen, helping to maintain momentum in the market as we head into the new year.
Although today’s decision is positive, the Bank of England has made it clear that future rate changes will depend on how inflation and the wider economy perform in the months ahead. That said, this announcement is likely to be seen as a step in the right direction for the property market.
If you are thinking about buying, selling or reviewing your mortgage options, now is a great time to have a conversation. We are always happy to offer clear, honest advice to help you plan your next move with confidence.