"In reality, a reduction of just 0.25 percentage points has not made a significant impact on the overall cost of mortgage payments, as financial markets had expected it and already priced it in."
- Paul Broadhead - BSA
The September Property Tracker Survey from the Building Societies Association reveals consumer expectations on the Bank Rate decision, as sentiment in the housing market remains low.
What is expected of the Monetary Policy Committee?
Following the cut in the Bank Rate last month, the first since March 2020, fewer than half of UK adults (44%) think that based on the current economic conditions the Bank of England’s Monetary Policy Committee should cut the Rate again at lunchtime today.
23% want to see a 0.50 percentage point cut or more, with a similar number (21%) who believe a cut of just 0.25 percentage points is needed.
Unsurprisingly, mortgage borrowers are more likely to want the Bank Rate to fall today, with 59% saying it should be cut.
21% of UK adults think the MPC should leave the rate at 5.00%. Only 6% think there should be an increase in the rate, which falls to just 2% for those who have a mortgage on their home.
Mortgage affordability
Whilst the majority of mortgage borrowers are expecting a Bank Rate cut today, the vast majority are not worried about their mortgage costs. Just 8% are concerned about maintaining their mortgage payments for the next six months, down from 10% three months ago (June 2024). Only 2% said they are not at all confident they can keep up their repayments.
That confidence is not the same for would-be homeowners. The report shows that the affordability of monthly mortgage repayments continues to be the biggest barrier to buying a home, with 61% citing this. 55% said raising a deposit is an obstacle to them getting a step on the property ladder.
Housing Market Sentiment
Despite the Bank Rate cut last month, overall sentiment in the housing market remained low. 17% think now is a good time to buy a home, with 35% thinking it is not a good time to buy – giving a net score of minus 17. Whilst this is an improvement on the market sentiment in June, when the net score was minus 24, it demonstrates a continued lack of confidence in the market.
Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association said: “The cut in the Bank Rate last month marked a significant turning point in what had been a very difficult two and a half years.
“Whilst the news was welcomed by many homeowners and would-be homeowners at the time of the cut, in reality, a reduction of just 0.25 percentage points has not made a significant impact on the overall cost of mortgage payments, as financial markets had expected it and already priced it in. It is not therefore surprising that the majority of mortgage borrowers are looking for a further cut this month.
“It is clear that it will take more than a small 0.25 percentage point shave off the Bank Rate to bring confidence back to the housing market. First-time buyers, which are critical for a properly functioning housing market, are still indicating that they are unable to afford to take that step into homeownership.
"Whilst they will be hopeful of a rate cut it’s quite possible that their hopes will be dashed at noon. Markets and forecasters are expecting the Bank Rate to remain unchanged whilst the MPC wait for additional evidence that inflation will remain persistently lower in the future.
“Any mortgage borrower who is concerned that they may experience financial difficulties in the coming months should contact their lender as soon as possible, preferably before missing any payments. Mortgage lenders have a range of practical, tailored support available to anyone who may be struggling.”
