"The decline in the base rate is already being factored into lower mortgage rates which have reached a two-year low over the autumn. Lower borrowing costs are expected to support buyer demand and sales into 2025"
- Richard Donnell - Zoopla
The MPC last reduced interest rates in August from 5.25% to 5%, marking the first cut since March 2020.
Industry experts have stated that while today's cut signals confidence from the Bank which should reassure buyers and encourage them to continue with their property plans, the Budget may be putting the brakes on the pace of future cuts.
Richard Donnell, Executive Director at Zoopla comments: ""The reduction in the base rate to 4.75 per cent is welcome news and has supported continued strong sales growth over 2024 versus last year. The decline in the base rate is already being factored into lower mortgage rates which have reached a two-year low over the autumn. Lower borrowing costs are expected to support buyer demand and sales into 2025."
Gareth Lewis, managing director of specialist lender MT Finance, says: “Today’s decision to cut interest rates is a welcome move that will provide a much-needed boost to borrowers.
“Despite the market reaction to the Autumn Budget and the subsequent rise in swap rates, lower interest rates can stimulate economic activity, encourage investment, and reduce borrowing costs for businesses and consumers.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “It’s a significant week for the property market with the Budget, the US election, and now the Bank of England’s interest rate decision.
“The August rate reduction boosted buyer confidence, leading to an uptick in applicant registrations, viewings, and offers, contributing positively to our fourth quarter revenue. A further rate drop would likely encourage more vendors to sell and buy, helping to 'get people off the fence.' With likely further reductions throughout next year, this should provide stability, giving people the confidence to plan, which is essential for maintaining market momentum.
“With the Budget behind us, we now have greater certainty. Homeowners without second homes may feel encouraged by a rate drop, though those with holiday homes or rental properties may wait for further rate cuts before re-entering the market.
“We are cautiously optimistic but concerned about the future stamp duty rate change for first-time buyers. Do they realise how long it takes to complete a purchase? If the mortgage market reacts positively to today’s reduction, first-time buyers should seriously consider making their move to agree on a purchase before Christmas, as delays could prove costly.”
Guy Gittins, CEO of Foxtons, said: “Whilst homebuyers will have been disappointed about the lack of a stamp duty relief extension in last week’s Autumn Budget, news today that interest rates have been cut will certainly help to boost their mood.
"The UK property market has already been showing strong signs of recovery in 2024 and this has been driven by improving market sentiment as a result of a more stabilised lending landscape.
"We also tend to see a wave of new buyer interest following a cut to interest rates, as those previously priced out of the market re-enter the fray and so today’s news will no doubt entice more buyers to make their move.
"With a stamp duty deadline now looming, we expect to see a supercharged level of market activity in the coming months as buyers look to complete before 1st April next year. Today’s decision to cut rates will only help add to this increased momentum and we now look set for a very strong end to the year and an even stronger start to 2025.
"There currently remains a good level of stock on the market, so whilst demand is set to climb, it’s unlikely to drive house prices to the same extent as it would in an under-supplied market.”
Stephanie Daley, Director of Partnerships at mortgage advisor Alexander Hall, commented: “We’ve already seen mortgage rates trending downwards in recent months due to a higher degree of mortgage market stability and many within the mortgage sector will have already been anticipating today’s base rate cut.
"As a result, it’s unlikely we will see an immediate reduction in the current rates on offer to homebuyers and movers.
"However, today's cut will bring further confidence to those looking to move, many of whom had previously delayed their plans due to higher rates, and this release of pent-up demand will help to cultivate further property market positivity.
"Couple that with the increase in stamp duty as of April next year and we expect to see a rise in demand over the short term, which will also help to boost buyer confidence and potentially speed up transactions.”
Robert Sadler, Vice President of Real Estate at Excellion Capital: “While today’s cut to base rates is welcome news, we remain wary that any positivity will be muted by the negative impact of the recent Autumn Budget and the inflationary policies announced therein, the result of which is going to be a higher level of government borrowing than anyone predicted.
“The fallout of the Budget’s inflationary pressures is also likely to mean that this is the only base rate cut we see for the remainder of 2024.
“On a positive note, we know from history that markets tend to overreact to bad news such as the Autumn Budget, after which they do eventually settle because certainty is more secure than possibilities and promises, even if the picture created by that certainty is less than perfect.
“And because of this certainty, we fully expect the base rate cut to result in a fall in swap rates, but due to the aforementioned impact of the Budget, this swap rate drop will be smaller than previously expected.”
CEO of specialist lender Octane Capital, Jonathan Samuels, commented: “Today’s decision to cut interest rates will bring some early festive cheer to the nation’s homebuyers who may still be haunted by the lack of a stamp duty relief extension in last week’s Autumn Budget.
"In fact, it’s fair to say that the long-term benefit of lower interest rates and the resulting increase in mortgage affordability is likely to entice more buyers into the fold compared to the number that might be deterred due to higher stamp duty costs.
"So all in all, today’s news will be warmly welcomed and we expect to see property market momentum continue to build, as buyers respond positively to improvements across the lending landscape.”
