Interest Rate Cut: A Trigger for More Activity in the Property Market?
Big News for Home Movers! The Bank of England has just cut interest rates to 4.5%, making mortgages more affordable and boosting buyer confidence. With demand already 9% higher than last year and more sales being agreed, now is a fantastic time to sell your home or make your next move. If you've been waiting for the right moment, this could be it!
The Bank of England has announced a 0.25% reduction in the base rate, bringing it down to 4.5%. This is significant news for the property market, as interest rates influence mortgage affordability and, ultimately, buyer confidence. With inflation easing and borrowing costs stabilising, could this be the spark that reignites property transactions in 2025?
Let’s explore what this means for buyers, sellers, and the housing market as a whole.
Why Has the Base Rate Been Cut?
Over the past few years, the Bank of England has used interest rate hikes to combat soaring inflation, which peaked at 11.1% in October 2022. The base rate was gradually increased from 0.1% in late 2021 to a high of 5.25% in August 2023. However, with inflation now falling, down to 2.5% in December, the Bank has opted to ease borrowing costs and support economic stability.
Although further reductions may follow, the Bank remains cautious, ensuring inflation remains under control before making additional cuts.
How Will This Impact Mortgage Rates?
- Tracker Mortgage Holders – Those on tracker mortgages will see an almost immediate reduction in their monthly payments, as these loans move in line with the base rate.
- Fixed-Rate Borrowers – If your fixed-term mortgage is due for renewal, you could benefit from more competitive mortgage rates, making repayments more affordable than they were at the peak of last year’s hikes.
- First-Time Buyers & Movers – The lower base rate signals greater stability in borrowing costs, which could lead to improved mortgage deals and enhanced affordability.
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What Does This Mean for the Property Market?
The housing market is already showing signs of recovery. Buyer demand is 9% higher than a year ago, and there are 11% more sales agreed, according to the latest Zoopla data. With mortgage rates expected to remain in the 4-5% range throughout 2025, market confidence is growing.
What This Means for Sellers
🏡 With more buyers actively searching for properties, now could be an ideal time to sell. More competitive mortgage rates mean buyers have greater affordability, potentially leading to quicker sales and better offers.
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What This Means for Buyers
🔑 If you've been holding off on a move due to high interest rates, the recent cut could make mortgages more affordable. As borrowing costs stabilise and more homes come onto the market, 2025 could be a great year to make your move.
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Outlook for 2025: A Positive Year for the Market?
With lower interest rates supporting affordability and 5% more housing sales expected this year, the property market is set for a busier and more confident 2025. Stability in mortgage rates and a healthy level of properties coming to market mean that buyers and sellers alike could benefit from increased activity and improved conditions.
If you're considering buying or selling this year, now is the time to get ahead of the market. Get in touch with WhiteKnights today to discuss your next move!
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