The average price of a newly marketed UK home has dropped by more than £5,000 month-on-month in August, as the distractions of school summer holidays traditionally bring a dip in prices.
Read MoreUK house prices drop by more than £5,000 in August
Tag: bankofengland
Housing market demand surges following interest rate cut
The housing market experienced a surge in activity following the Bank of England’s recent decision to cut interest rates, according to a leading property website.
Estate agents reported a 19% jump in enquiries about properties for sale after 1 August, when compared with the same period last year, research by Rightmove found.
It came after the Bank cut rates for the first time in more than four years from 5.25% to 5%.
Rightmove’s Tim Bannister said it was clear that the Bank’s decision had “sparked a welcome late summer boost in buyer activity”.
He added: “While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment.
Read MoreRate cuts to fuel house price rises, Halifax says
Lower mortgage costs and more interest rate cuts could fuel a rise in house prices for the rest of this year, Halifax has said.
The mortgage lender’s prediction came after property prices ticked up in July following a flat few months.
Halifax said recent mortgage rate drops were “encouraging” for first-time buyers, those moving along the housing ladder or those refinancing.
But it warned affordability challenges and lack of available properties still posed problems for buyers.
“Against the backdrop of lower mortgage rates and potential further [Bank of England] base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year,” Amanda Bryden, head of mortgages at Halifax said.
Last week the Bank of England lowered interest rates to 5% – the first cut since the start of the pandemic in March 2020, but its governor warned not to expect a flurry of further reductions.
Read MoreWhat can I do about my mortgage now the base rate has been cut?
Last week’s Bank of England interest rate cut, the first since 2020, spelled good news for millions of homeowners and would-be buyers – but it has also given them lots to think about.
If you are looking to buy a home, what sort of mortgage do you go for, and is this going to push house prices even higher? And if your existing mortgage deal is about to end, should you grab another one right now, or hold fire in case lenders launch cheaper products?
The cut, from 5.25% to 5%, should translate into lower borrowing costs for homeowners with a base rate tracker mortgage, or whose monthly payments are linked to their lender’s standard variable rate (SVR).
However, almost 7m of the UK’s 8.4m existing residential mortgages are on a fixed rate, so most people won’t see any change. A chunk will, however, need to consider their options over the next few months because their current deal is coming to an end.
Here we round up some of the advice from mortgage brokers.
Read MoreMortgage rate hopes as one lender offers below 4%
Mortgage rates have fallen as competition between lenders intensifies ahead of the Bank of England’s next rate decision.
The average rate for a two-year fixed deal, which had been very close to 6% at the start of the month, is now at 5.79%, according to the financial information service Moneyfacts. The average five-year rate is 5.39%.
The Nationwide has become the latest lender to move, by reducing its five-year fixed mortgages, for new customers moving home with a 40% deposit, to a rate of 3.99% plus a fee.
Mortgage analyst Kylie-Ann Gatecliffe said this could be the start of a “rate war” between the big banks.
The last time Nationwide – the UK’s biggest building society – offered rates below 4% was in February.
“Although this is only available for purchases right now, we hope that the re-mortgage market will follow,” said Sarah Tucker, founder of The Mortgage Mum.
Matt Smith, from property portal Rightmove, said: “We’ve seen average mortgage rates drop at a pace not seen for a while this week.
“The first sub 4% rate for those with larger deposits and prepared to pay a higher fee is the headline-grabber, but we’ve also seen some notable drops in rates in other loan-to-value brackets which should benefit more mass-market movers.”
Read MoreMortgage Rates 22 July 2024
The Bank of England held its Bank Rate at 5.25% in June, as was widely expected. It was the seventh time in a row the Rate has been frozen since it rose to its current level in August 2023. It had previously undergone 14 consecutive rises (between December 2021, when it stood at just 0.1% and August 2023).
The next interest rate announcement by the Bank’s Monetary Policy Committee (MPC) will be on 1 August at noon. The market is hoping that the Bank Rate will fall to 5% at that point.
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