In a move aimed at bolstering the UK's economic growth, the Bank of England has reduced its base interest rate by 0.25 percentage points, bringing it down from 4.75% to 4.5%. This decision, announced today, marks the third rate cut in six months and brings the rate to its lowest level since mid-2023.
The Monetary Policy Committee (MPC) voted 7-2 in favor of the reduction, with two members advocating for a more substantial half-point cut. The committee cited significant progress in reducing inflation over the past two years, attributing this to the diminishing impact of previous external shocks and the restrictive stance of monetary policy, which has helped stabilize longer-term inflation expectations.
For the property market, this rate cut offers some immediate relief. Lower borrowing costs can make mortgages more affordable, potentially encouraging more individuals to enter the housing market. This could lead to increased activity in property transactions and provide a boost to the construction sector as demand for new homes rises.
Our Investment Manager, Jai Khandpur MRICS, stated: "The Bank of England’s decision to cut interest rates from 4.75% to 4.5% is a welcome boost for the UK property market. While a modest reduction, it signals a positive shift that could ease pressure on homeowners and buyers alike. Lower borrowing costs will offer some immediate relief to those looking to secure a mortgage, making homeownership more accessible. The hope now is that this is just the beginning of a series of cuts, helping to reinvigorate the housing market, encourage investment, and get Britain borrowing and building again".
