Bank of England base rate cut

After a year of the Bank of England base rate being held at 5.25%, it’s been announced today that it will be cut to 5%. This 0.25 percentage point reduction is the first reduction since April 2020 when the base rate was set at 0.1% and follows a period of steady increases between December 2021 and August 2023, which have been well-documented.

A key reason for the base rate being reduced is that inflation is meeting the 2% target set by the UK Government. This helps to demonstrate that the economy is in a stronger position following months of fluctuations.

What does the base rate reduction mean for the property market?

It’s great for homeowners, sellers and those looking to buy as it will likely mean access to better and more affordable mortgage deals.

For home buyers

Home buyers have the opportunity to get access to better mortgage deals, which in turn can improve their affordability rating. This may widen the pool of potential properties that they can buy, or it may allow them to retain slightly more money  each month for other living expenses.

For home sellers

The reduction in the interest rate is a clear sign of confidence in the wider economy and this in turn will draw more potential buyers to properties, especially if lower mortgage rates mean buying a home becomes more affordable. Having more buyers in the market is essential for getting those all-important sales and invigorating property transactions.

For homeowners

If you are nearing the end of your existing fixed rate deal, then this news will be welcome as it could mean a better price for your new mortgage.

With the ongoing potential for future interest rate changes, we advise buyers and sellers to seek independent, professional mortgage advice about the best deals available to them.

Strengthening our resilient market

We expect to see even more confidence in our stable property market. The market in Edinburgh in particular is typically very stable, and we’ve consistently seen strong sales prices and volumes. The same is true across all ESPC areas such as East Lothian, Midlothian, Fife, the Scottish Borders and Dumfries and Galloway.

We don’t expect an instant shift behind sales and demand at present, but it will certainly improve the buying opportunity for many and increase confidence in the market once again.