The Bank of England has announced another cut to the base rate of interest today, bringing it down to 4.75%.
This move was widely anticipated over the last month as inflation in the Consumer Price Index (CPI) fell to a rate of 1.7% in the year to September 2024.
That’s below the official government target of 2% - which was restated in the recent Budget – and gave the Bank enough of a safety net to make another cut.
Second cut this year
This is the second cut in the last three months and is the most important evidence so far that the UK’s economy is in a much stronger place.
Previously, the rate was cut to 5% in August following seven successive holds. It was the first cut in two years and was a good sign for the property market.
The August cut was the signal for mortgage rates to drop, and the housing market received an immediate boost thanks to these lower borrowing costs.
The lower rate was then held in September and the market continued to grow. House prices rose at their fastest pace for two years, buyer demand grew 26% and sales agreed went up 25%.
As we entered Q4 2024, it felt like an extremely positive time in the property world, with much more good news still to come.
Borrowing costs likely to fall further, house prices to increase
That turned out to be correct. Lower rates will bring mortgage costs down even further. Firstly, for people already on tracker and variable deals who will see an instant drop.
Secondly, for people looking to take out a mortgage in the future. High street lenders are likely to offer lower rates than before following this cut, meaning that it will cost less to buy property with a mortgage.
That is great news for both owner-occupiers and investors who want to buy UK property in the coming months and years. In particular, falling mortgage costs make it a lot cheaper to buye off-plan property where the final purchase is delayed into the future, when mortgage rates are likely to be much lower than now.
In addition, those who buy now will be able to save on the purchase cost. Lower interest and mortgage rates mean that more buyers will enter the market, competition for the available properties will increase and house prices will go up.
That’s especially true in the next six months.
The changes to Stamp Duty announced in the Budget mean that lots of potential buyers will try to complete their purchases before next April. That rush of completions is very likely to push house prices up.
Lock in your property now, save in the future
All of that means that the smartest property decisions will be made in the next quarter. We are at the start of a new property cycle, and all indications show that house prices will continue growing fast.
Waiting until next year might end up costing you thousands of pounds as house prices will be higher thanks to the increased competition in the market.
On the other hand, if you reserve an off-plan property now, you lock in today’s price and can pay with tomorrow’s lower mortgage rates.
It’s a way to win at both ends of the transaction and ensure that you secure the highest possible return on your investment. Whether you are an owner-occupier or a property investor, buying sooner rather than later is a savvy move that will earn you the most capital appreciation possible.
Manchester apartments for sale and Birmingham buy to let property are just two examples of markets which are highly likely to grow strongly over the next four years. The top UK towns and cities for buy to let investment will be in higher demand than ever.