Connected media – Connected media
LONDON — In response to the Bank of England’s recent decision to lower interest rates for the first time in four years, major UK banks have slashed mortgage rates, invigorating the housing market significantly.
Institutions such as Barclays, Halifax, HSBC, and NatWest are now offering five-year fixed-rate mortgages at rates below 4%, which is under the BOE’s primary rate of 5%. The most competitive of these offers is a five-year fixed rate at 3.83% for homebuyers who can make a 40% down payment, as revealed by the latest Rightmove report. This rate is the lowest since the economic fallout from the UK’s mini-budget in September 2022.
This reduction aligns with the Bank of England’s adjustment earlier this month, which saw a decrease of 25 basis points.
The favorable economic signs and political stability post-UK general election in July have sparked a noticeable rise in housing market activities, according to Rightmove’s insights.
There has been a 19% increase in potential buyers reaching out to estate agents to arrange viewings since the Bank’s decision on August 1, a significant jump from the 11% annual increase noted in July. Furthermore, the influx of new sellers in the market this month has risen by 5% compared to last year, with the number of finalized sales soaring by 16% from the previous year when mortgage rates were near their peak.
Tim Bannister, the director of estate at Rightmove, commented that the modest rate decrease has provided substantial relief to homebuyers and anticipates a further surge in market activities this fall.
He added, “While the drop in mortgage rates post-rate cut hasn’t been substantial, the initiation of the rate cut cycle and the downward trend in mortgage rates are boosting buyer confidence.”
Rightmove has updated its forecast for 2024, now predicting a slight 1% increase in asking prices from new sellers, revising their earlier prediction of a 1% decline.
With the Bank of England’s next meeting scheduled for September 19 to decide on interest rates, market analysts are speculating. Current data suggests about a 37% likelihood of a rate cut in September, with expectations increasing to 74% for November.
Peter Gettins, a product manager at L&C Mortgages, noted that many prospective buyers are keenly observing the upcoming meeting to gauge future mortgage rate directions. He mentioned, “A further reduction in the base rate in the near future could consolidate buyer confidence even more.”
The housing market’s response to these changes will be closely monitored as further developments unfold.
Related media – Linked media