The Bank of England has cut the base rate by 0.25%. Here’s what agents need to know, and how you can make the most of it.
The Bank of England have announced has cut the base rate to 4%
With the base rate being cut by just 0.25%, it's unlikely to have any major impact on current activity
The property market is already seeing strong levels of both supply and demand
Recent changes to mortgage affordability testing are further boosting the number of buyers in the market
The Bank of England has announced a 0.25% cut to the base rate, bringing it down to 4%. It’s the first time in more than two years that the base rate has dropped to this level, and it’s likely to give buyers and sellers across the market a renewed sense of confidence. However, with the current property market already experiencing strong supply and demand, a 0.25% cut likely won’t make a big difference to market activity overall.
"While today's cut in the base rate is welcome news for businesses and consumers, it's unlikely to make a major difference to the cost of mortgages for home buyers or deliver a boost to house prices. The price of fixed rate mortgages already factors in the future path of base rates meaning average mortgage rates are likely to remain broadly where they are today.
"However, changes to the way banks assess mortgage affordability over recent months have already delivered a 20% boost to what people can borrow with no change in average mortgage rates. This has been supporting unseasonably strong levels of housing market activity with the most homes for sale in over seven years. This cut to the base rate will support more positive housing market sentiment amongst home buyers.
"Lenders are offering very competitive mortgage deals so it's important home buyers talk to a mortgage broker to understand what they can afford and what this latest cut means for their home buying decisions."
With buyer demand 11% higher than a year ago, seeing more active buyers has given homeowners the confidence to get their properties on the market. This has resulted in a record number of sales available on the market, giving buyers more choice.
Recent changes to mortgage affordability testing are also boosting the number of buyers in the market, with buyers now able to borrow up to 20% more than they could just 3 months ago.
With this in mind, now is a great time to reconnect with buyers and sellers to see what the current market means for their budgets. While the conversation for buyers should focus on the vast amount of properties available to choose from, for sellers, it's a good idea to focus your conversations on the the ongoing surge in buyer demand. Making them aware that, while there are more buyers ready to move, competition is high, and so making sure their pricing reflects this is a top priority.
Make sure you're using the latest insight from our House Price Index, to help inform your conversations.
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We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zoopla accepts no responsibility or liability for any decisions you make based on the information provided.
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