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BoE cuts by 0.25%: "This decision could pour petrol onto the UK property market"

ended 07. November 2024

As widely predicted, the Bank of England has just cut the base rate by 0.25% to 4.75%. Full minutes >> here <<. Newspage asked experts what this cut to the base rate could mean for borrowers and the broader property market. Their views are below.

17 responses from the Newspage community

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Ben Perks
Managing Director at Orchard Financial Advisers
This decision could pour petrol onto the UK property market. This really is fantastic news for borrowers and lenders alike. All eyes now turn to swap rates that are sure to react positively, so I'm certain we'll see better rates available to borrowers soon. The 8-1 split is particularly poignant and will fuel hopes of a further cut this year, although that is by no means guaranteed.
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Andrew Montlake
Managing Director at Coreco
Whilst this cut will be celebrated joyfully by all those looking to buy or remortgage in the near future, it is important to note that this does not necessarily mean that mortgage rates will drop substantially in the short-term. This move comes despite the Budget and the massive £40 Billion tax hike having a potential future effect on inflation and interest rates, as well as the reverberations of the US election result which has sent the US stock market spiralling and weakened Sterling against the Dollar. Lenders have already increased their mortgage rates in the run-up to this decision, and it does seem that markets are now expecting rates to fall much slower next year than expected. However, the good news is that this shows the Bank of England is confident that even amongst all the uncertainty they have now tamed inflation sufficiently to be able to continue with their longer-term plans to reduce interest rates.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
The Bank of England has adopted a slow and steady approach in an ever-changing economy, betting that the cautious strategy will drive growth and price stability. September's inflation figures played a crucial role in today's decision, with the UK's inflation rate falling below the 2% target for the first time since 2021. Furthermore, a growing trend of global easing put pressure on the central bank, with the Federal Reserve largely expected also to cut rates later today. Consequently, despite budgetary headwinds, the market consensus firmly leaned towards a November rate cut, so this decision will not come as a surprise. However all eyes will now be on the December meeting where the BoE are likely to opt for a more cautious stance. While the prospect of lower rates offers a glimmer of hope for Britain's beleaguered borrowers, next month’s decision will reveal whether the dovish pivot is indeed a watershed moment for the mortgage market or merely a false dawn in these uncertain times.
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Adam Stiles
Managing Director at Helix Financial Partners
The drop by 0.25% to 4.75% in the base rate by the Bank of England is fantastic news for borrowers. We wouldn't expect to see another Bank of England rate drop this year but we hope to see lenders adjust their variables rates quickly. If SWAPs come down we could see some lenders reducing rates once more, after a couple of weeks of increases. there is hope for borrowers yet.
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Craig Fish
Director at Lodestone Mortgages
This was most certainly the right decision, but possibly it will be the last cut for a while, as confirmed by the Monetary Policy Committee comments suggesting that the Budget was inflationary. Reductions will continue throughout 2025, but at a much slower pace.
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Kelsey Phillips
Head of Specialist Lending at Arose Finance
Mortgage rates continue to rise despite the Bank of England cutting its base rate. In the wake of a UK austerity Budget and Trump’s U.S. election victory, we’re now facing a unique market dynamic: a falling base rate paired with rising borrowing costs. To interpret this dynamic, it’s crucial to consider how inflation expectations have adjusted over the past two weeks. Financial markets consider how several factors could intensify inflationary pressures: the potential for U.S. import tariffs, significantly higher UK government borrowing, and a weakening GBPUSD exchange rate (as a nation that imports ~£700bn annually). Consequently, over the past few days UK gilt yield and overnight index swap curves have steepened causing mortgage rates to marginally increase – a symptom of financial markets now anticipating higher long-term rates relative to rates in the near-term.
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Rohit Kohli
Director at The Mortgage Stop
With inflation already dropping decisively below the 2% target, today’s rate cut from the Bank of England was nailed on. However, with the UK government's first Budget last month and Trump due to come back into power in January, we’re in for a period of extreme unpredictability. Any hopes of another cut in December have all but evaporated. Borrowers are going to be on tenterhooks over the next few months as global markets react to what’s happening both at home and across the pond. If you're a borrower or looking to borrow, it's time to get out your crystal balls to try and predict what the next 12 months may bring.
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Darryl Dhoffer
Founder at The Mortgage Geezer
The Bank of England has followed market expectations by reducing its base interest rate by 0.25% to 4.75% with a vote of 8-1 in favour of a 0.25% cut. This decision, in line with the global trend of central banks easing monetary policy, is unlikely to cause significant market volatility. The move comes amid economic uncertainty and easing inflationary pressures. It's seen as a proactive measure to stimulate growth and prevent potential deflation. However, the muted market response suggests that investors had already anticipated this rate cut. Market participants will be closely monitoring the BoE's forward guidance for insights into future interest rate decisions. While the rate cut may provide some relief to borrowers, its impact on reigniting economic growth remains uncertain.
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Riz Malik
Independent Financial Adviser at R3 Wealth
It is likely that this is the final base rate cut of 2024. Before the Budget, the expectation was there could be another one in December but Rachel Reeves appears to have taken that off the table. The Bank of England will be keeping a key eye on developments across the pond but rate cuts are expected to continue into 2025.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The Bank of England's decision to cut rates to 4.75% offers a welcome relief for mortgage borrowers, signaling a gradual restoration of economic stability. This move comes as we continue to see progress in reducing inflationary pressures, even as domestic challenges persist. For homeowners and prospective buyers, this reduction in borrowing costs is a positive step, helping to rebuild confidence after a turbulent period. As we approach the new year, we expect continued stability in mortgage rates, with lenders likely to remain competitive to support borrowers amidst ongoing affordability concerns.
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Tony Castle
Managing Director at PFG Mortgages
The Bank of England has pulled another top trump by cutting borrowing costs for the second time this year. This is great news for first-time buyers and those looking to remortgage in the not too distant future. All eyes will now be on the next meeting on the 19th December to see if interest rates will be reduced further.
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Justin Moy
Managing Director at EHF Mortgages
The immediate impact on mortgage rates will only be for those on tracker deals, as fixed rate pricing is not directly linked to the base rate. Money markets have priced this cut in for some time, and the Budget from last week is still pushing rates in the opposite direction. Whilst it’s a positive move from the Bank of England, there is more to mortgage pricing than this move today.
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Jack Tutton
Director at SJ Mortgages
A vote of 8-1 in favour of the cut will be more important to markets, as it may mean that further cuts may still be on the table in the near future. Markets were expecting another cut in December, however this was shattered after the Budget and saw several lenders increasing their rates since. The hope would be that such a strong vote will give markets more confidence and mean the interest rates lenders charge can start to come back down.
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Dariusz Karpowicz
Director at Albion Financial Advice
As anticipated, the Bank of England has lowered the base rate by 0.25% to 4.75%. This decision is likely to have a notable impact on the UK property market. Lenders have already been proactive in adjusting mortgage rates in anticipation of this cut. With the BoE's move, we can expect to see further reductions across a range of mortgage products. This new-found confidence from lenders is likely to stimulate demand from prospective homebuyers, who will be attracted by the prospect of more affordable borrowing. The increased availability of low-cost mortgages may reignite activity in the property market, potentially driving up house prices once again. Existing homeowners could see the value of their properties rise, while landlords may seize the opportunity to increase rents. However, this dynamic is not without its challenges, as first-time buyers may find themselves priced out of the market as property prices surge.
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Amit Patel
Adviser at Trinity Finance
The Bank of England cutting the base by 0.25 bps is welcome news for home buyers and those individuals who are coming off fixed rates and due to re-mortgage. The banks decision means interest rates are at their lowest level for more than a year.
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Ben Tadd
Director at Lucra Mortgages
Welcome news for millions of UK households with the Bank of England cutting the base rate for the second time this year. Whilst base rate trackers will drop automatically, reducing payments down, the effect will not be seen as widespread for those looking for a fixed rate, with lenders having nudged their rates up over the last few weeks in anticipation of a base rate cut and in reaction to swap rates. Nevertheless a welcome albeit small sigh of relief for all mortgage borrowers.
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Iain Swatton
Director at Exemplar Financial Services
Today’s 0.5% cut to the Bank of England base rate, though anticipated, could be just the start, with the prospect of further reductions on the horizon. With Christmas around the corner, borrowers may see some seasonal relief. Despite recent increases in fixed mortgage rates, this base rate reduction might encourage lenders to reverse the trend, bringing potential savings and stability to those looking to borrow. As markets react, this shift signals promising news for mortgage holders and new buyers alike.