Latest Interest Rate by Heather Hilder on December 12, 2024 Latest Interest Rate How will the latest interest rate cut affect the property market? The Monetary Policy Committee’s November cut in the base rate was long-awaited. It meant the potential for lower mortgage rates and the hope of increased consumer confidence to buy, despite the Budget a few days before. At the November meeting, the MPC voted by a majority of 8-1 to reduce the bank rate by 0.25 percentage points to 4.75% with only one committee member in favour of maintaining it. The next meeting and base rate announcement is on 19 December. The question is, ‘How will the latest interest rate cut affect the property market?’ Increased positivity So what impact has the interest rate cut had and how might it impact your property plans for 2025? The base rate was first cut in August – the first reduction since 2020. It prompted an early autumn surge of activity in the property market. The end of October saw the release of Labour’s first budget since coming to power in the summer. Although there was news of immediate stamp duty hikes for second property owners, such as landlords, for general buyers stamp duty land tax changes don’t take place until April. Falling mortgage rates Mortgage rates had begun to fall below 4% pre-October, although they soon began to creep up again due to economic uncertainty. Inflation had risen and there was nervousness about the budget as its implications were digested. In early December, mortgage rates began to fall once more when lender Natwest announced it would cut its rates by up to 0.39 percentage points. It revealed its lowest five-year fix would start from 4.1% – the cheapest on the market at the time of the announcement. Rising house prices Market experts still expect positive UK house growth, even if they aren’t at the highs predicted earlier in the year. House prices are expected to end 2024 around 2.5% higher than last year. Estimates for 2025 growth range from 2.5% to 4% as buyers and sellers become more confident about their buying and moving plans. According to Halifax, property values rose 1.3% in November in the biggest monthly increase of the year. Demand is continuing to build. In November, Rightmove reported that since the base rate cut it had witnessed an increase in demand. The number of people contacting estate agents about homes for sale rose 23% compared to 2023, while the number of sales agreed rose 26%. Further interest rate cuts expected in 2025 With inflation hovering close to its 2% target further interest rate cuts are expected, although perhaps not in the December announcement as had previously been anticipated. However, the Governor of the Bank of England, Andrew Bailey, was quoted in early December as saying that four additional rate cuts are likely in 2025. That could mean the base rate is reduced to 3.75% by the end of next year. This should give lenders greater confidence in cutting mortgage rates. Hope for renters wanting to buy In addition to making life easier for those wanting to move house, interest rate cuts will also help first-time buyers as mortgage affordability improves. Whatever happens, the UK property market is certainly in a much stronger position than this time last year, giving confidence to buyers and sellers alike. At Callaways Estate Agents, we do all we can to help you complete a smooth house sale. We operate across the South Coast, including in Falmer, Worthing and Brighton & Hove, and our experience and know-how of the local area will help you set the right price and attract the best kind of buyers. For more info about our services, please get in touch with us today. You can also get a free, instant online valuation of your home by clicking here.
