Property industry experts comment on the Bank of England interest rate
Property industry experts comment on the Bank of England interest rate, which today (7 November) has been set at 4.7% from 5% last month.
Richard Donnell, Executive Director at Zoopla, commented:
“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.”
Nathan Emerson, CEO of Propertymark, commented:
“Today’s announcement will be welcome news for buyers, especially for those who may have been delaying any house move due to potential uncertainty on their overall affordability.
“With the Bank of England’s most recent Money and Credit Report revealing net mortgage lending has further increased by 0.9 per cent in September, up on the 0.7 per cent seen in August, coupled with proposed changes to Stamp Duty thresholds from next April, it’s highly likely we may see buoyant activity in the market across the winter months.”
Warren Martin, Director of Operations at ONP Solicitors, part of Movera, said:
“Today’s rate cut from the Bank of England is a welcome step for the housing market and couldn’t be better timed.
“At ONP, we’ve seen transaction volumes taper off over the last two weeks, with many prospective buyers and remortgagers sitting tight in anticipation of this announcement.
“Now, with this decision, we hope to see lenders release some appealing, competitive mortgage products in the run-up to Christmas, which would help stimulate the market at year-end.
“This rate reduction is particularly encouraging for first-time buyers and those facing remortgage deadlines in 2025—an estimated 1.8 million homeowners who might otherwise be bracing for steeper repayments.
“Although some payment increases are likely inevitable, today’s decision should go some way to soften that blow.
“Additionally, with the government’s recent measures to increase affordable housing, boost small housebuilder guarantees, and restrain speculative investments, this rate cut should enhance affordability across the board.
“All eyes will be on the upcoming CPS inflation figures on the 20th to see how these moves will translate to everyday costs, but today’s announcement certainly signals a positive shift for both affordability and accessibility in the housing market.”
Commenting on how the BofE rate cut following the Budget’s housing initiatives has brightened the UK property outlook, Daniel Austin, CEO and co-founder at ASK Partners, said:
“The Bank of England’s rate cut of 0.25 combined with declining inflation and new fiscal measures, signals a potential shift toward more favourable conditions in the UK property market.
“House prices have shown consistent month-on-month growth, indicating a possible upward trend into 2025.
“The Autumn Budget’s £5 billion allocation for new homes and a permanent 95% loan-to-value mortgage guarantee scheme aim to boost housing supply and stabilise property values.
“While this is beneficial for first-time buyers, it may be counterbalanced by lower stamp duty thresholds.
“Meanwhile, the rental market remains robust, bolstered by incentives like £3 billion in Build-to-Rent housing guarantees, which enhance the appeal for developers.
“The Affordable Homes Programme also supports SME housebuilders, potentially increasing supply and alleviating market constraints.
“For property investors, the real estate sector remains a compelling alternative to gilts, with opportunities for growth.
“Despite the relief from excluding buy-to-let properties from capital gains tax hikes, landlords continue to face higher stamp duty on second homes.
“This strain on the rental market, driven by limited supply, may temporarily boost the number of properties available for purchase, as mortgage approvals recover to pre-mini-budget levels.
“Developers focused on co-living and Build-to-Rent projects could benefit from a tighter rental supply—contingent upon favourable planning reforms.
“Private landlords exiting due to rising costs might channel their investments into alternative real estate strategies, such as property debt.
“These strategies offer attractive tax benefits, with income-based returns exempt from capital gains tax on interest.
“As CGT liabilities potentially rise, this approach provides continued market exposure with greater financial efficiency, making it increasingly attractive within a shifting regulatory landscape.”
Commenting on the BoE decision to cut interest rates, Arjan Verbeek, CEO and Founder of Perenna, said:
“If Rachel Reeves deployed a fiscal bazooka in the Budget, the Bank of England has continued to draw on its own arsenal to drive down borrowing costs and support growth.
“Lower rates alone don’t buy houses, so while this is change will be welcomed, it’s not going to move the dial materially for frustrated first-timers.
“In reality, rate changes alone won’t tackle the affordability crisis we have in the UK.
“Plenty of potential homeowners already pay a lot more in rent than they would if they could secure a mortgage on current rates.
“The issues stem from their ability to secure finance in the first place.
“The restrictions placed on lenders via the loan-to-income cap only compound this problem, preventing individuals and families into homeownership who could afford it.”
Andrew Gall, Head of Savings and Economics at the Building Societies Association, said:
“As we expected the MPC has today cut the Bank Rate to 4.75%.
“This is likely to give a boost to consumer confidence and lead to an increase in housing market activity.
“However, shaving 0.25% off the Bank Rate will not be a magic wand for those trying to take their first step onto the property ladder.
“First-time buyers, who are critical for a properly functioning housing market, say that they are unable to afford homeownership.
“The BSA’s Property Tracker Report shows that raising a deposit and affordability of monthly mortgage payments are the biggest barriers to buying a home, and have been for many months.
“It’s a different picture for those who are already mortgage borrowers who will welcome today’s announcement.
“Whilst those coming to the end of their fixed rate mortgage term still face a significant increase in their mortgage payments, the vast majority of existing borrowers are not worried about maintaining their mortgage payments.
“Just 2% said they are not at all confident they can keep up their repayments in the Property Tracker Report.
“Anyone 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.
“Lenders have a range of practical, tailored support available to anyone who may be struggling.
“Savers may be a little disappointed at the Bank Rate cut.
“However, with inflation below 2% (1.7%), most best-buy savings rates, even with the latest cut, are likely to remain higher than inflation, meaning most savers will continue to enjoy real returns on their savings.”
