For the first time since March 2020, the Bank of England’s Monetary Policy Committee (MPC) on 1 August cut the standard base interest rate. The rate, which had climbed from almost zero at 0.1% during the pandemic to 5.25% last year, had been raised in every consecutive MPC meeting from December 2021 through August 2023. In September 2023, the MPC rate setters voted to keep the rate steady hoping the 16-year high rate would do the work against inflation to bring it to target at 2.0%. Inflation did reach target and the committee voted this month to cut the rate by 0.25% to 5.0%. Now the question is will there be another rate cut and when?

It seems there are always decisions to be made as a homeowner. Those decisions can range from the simple to the complex, but perhaps none can keep one up at night more than a decision that involves money, especially when the wrong decision could cost the homeowner money, and the right one could save them money. This sort of decision is exactly at play currently for many homeowners considering whether to remortgage now or later.

The housing market is likely to see a spark of buying in the next release of data. There are many reasons for home buyers to take a better look at the market now. One reason is interest rates dropped as the confidence in a sooner rather than later cut to the standard base interest rate was expected by the Bank of England’s Monetary Policy Committee (MPC). Lenders did not even wait on the MPC and dropped their offered rates with some doing so to a lower level than the outcome forecasted when the MPC would finally have the majority vote to cut the rate.

The UK housing market has seen an injection of new demand from buyers due to lower interest rates offered by lenders. These lower rates were triggered by the expectation the Bank of England’s Monetary Policy Committee (MPC) would soon be lowering the standard base interest rate from its 16 year high of 5.25%. The base rate had remained steady at this level since September of last year. The lower offers on mortgages were available to borrowers prior to the majority vote by the MPC to cut the base rate on 1 August. Now that the MPC has lowered their rate, it is possible another could follow and perhaps lenders would be confident to cut their own rates again, but if not, no matter as the current rate offers are surprisingly attractive.

In a snapshot of the housing market for June, the Office for National Statistics (ONS) revealed the average house price grew by 2.7% to £288,000. This is the fifth month in a row in which there was an increase in the average house price. While the ONS data is released later than other housing market reports, it covers completed sales and is considered the more accurate insight to the market. The average house price increase from May to June amounted to 0.5%. 

First-time home buyers have had a challenging time climbing onto the property ladder. Currently there are many obstacles to becoming a homeowner. Interest rates are higher due to the Bank of England’s Monetary Policy Committee (MPC) fighting inflation following the global pandemic. The interest rate reached a 16-year high of 5.25% and was only recently cut this month for the first time since March 2020 to 5.0%. With borrowing more expensive, the repayment amounts are higher than they were when the interest rates were historically low as in 2020 to 2022.