The Bank of England’s decision to lower the base rate from 5% to 4.75% is the second cut this year and means interest rates are at their lowest point in more than a year. There are clear signs that the market is stabilising and today’s rate cut will be welcomed by those with tracker mortgages or considering their first purchase. It should be noted though that, while mortgage rates have been reduced in recent months and more reductions are expected, as house prices continue to rise, and interest rates fall more slowly than previously predicted, mortgage rates are very unlikely to fall to the previous lows.
However, the current state of mortgage rates and housing affordability—while fluctuating—still allows room for people to enter the market, even if it’s later in life. Overall, while mortgage rates are highly unlikely to reach the pre-COVID19 levels, the market has innovative products designed to help buyers consider their options. It remains a difficult environment for young buyers and part of the broader landscape of affordability issues that need to be addressed over time to ensure that the UK housing industry is in a position to deliver on the government’s ambitious targets for housing.
-David Meek, CEO