What the Bank of England Interest Rate Cut Means for the Property Market
6th February 2025
The Bank of England has announced a 0.25% cut in its base interest rate, bringing it down to 4.5%. This decision, aimed at stimulating the economy, could have a significant impact on the UK property market. But what does this mean for buyers, sellers, and investors?
Lower Mortgage Rates on the Horizon
One of the most immediate effects of this rate cut is the potential for lower mortgage rates. While tracker mortgages (which directly follow the Bank of England rate) will see an immediate drop, fixed-rate mortgage deals may take longer to reflect the change. Lenders often price in expected rate cuts in advance, but we could see more competitive deals emerging in the coming months.
Increased Buyer Demand
With borrowing costs becoming more affordable, we may see a rise in demand from first-time buyers and movers who have been waiting for mortgage rates to stabilise. This could lead to increased competition in popular areas, potentially pushing up house prices.
House Prices Could Stabilise or Grow
Over the past year, the property market has faced uncertainty due to high inflation and borrowing costs. A rate cut could boost market confidence, leading to more transactions and price stability. In high-demand locations like London, Manchester, and Bristol, we may even see modest price increases as demand outpaces supply.
More Confidence Among Sellers and Investors
Lower interest rates may also encourage more homeowners to list their properties, increasing supply and creating more opportunities for buyers. Property investors, in particular, may benefit as mortgage repayments become more manageable, potentially improving rental yields.
Looking Ahead: Is This the Start of More Cuts?
Many experts believe this may be the first of several rate cuts in 2025, which could further ease mortgage costs and stimulate the market. However, inflation remains a concern, and the Bank of England will likely take a cautious approach before making additional reductions.
What Should You Do Next?
- Thinking of buying? Now could be a great time to explore mortgage options before competition heats up.
- Looking to sell? Increased buyer demand could mean a faster sale at a competitive price.
- Investing in property? Falling mortgage rates could improve your rental yields and long-term returns.
If you’re considering buying, selling, or investing in property, our expert team at Jeffersons is here to help. Get in touch today to discuss how these changes affect your property journey!
