The Bank of England has reduced interest rates for the first time since the Covid pandemic – an interesting move I have to admit, and I am sure this positive news will be well-welcomed amongst homebuyers, first-time buyers included (and mortgage brokers! 🙂 )
However, and with the risk of coming across as prudent and cautious, I believe this decision will only have a limited impact on mortgage rates, and instead will be acting more as a booster for the UK property market in terms of sentiment and confidence.
Of course, it will be seen as a great sigh of relief for many however this catalyst for activity will not address the issue of housing affordability in the short or long-term.
Despite the rate cut, the MPC (Monetary Policy Committee) cautioned that monetary policy will need to remain restrictive until the target of 2% inflation is reached. Moreover, Andrew Bailey clearly said that rates would not come down to record lows again.
With the UK economy remaining in a rather very fragile state, a rate cut might sound like a positive move at first glance, however today’s global stock markets plunging amid fears of US ‘collapse’ and recession will not give the confidence to spend.
Due to austerity, we will see benefits cut and taxes rising for the middle class, this is inevitable. And housing affordability will remain a big issue for the reasons cited above, and could potentially put pressure on house prices in the coming years…
Here is the link to the article from Property Industry Eye with the first reactions from key property professionals on this latest news.
