In a move that defied the predictions of many economists, the Bank of England has decided to maintain it’s base rate of interest at 5.25%, marking a cessation after fourteen consecutive increases.
An Unexpected Pause
Despite the better than expected inflation news, many had still favoured a 0.25% increase in the base rate but understood that we were now likely at the end of consecutive base rate rises. This pause has now set what seems to be a precedent and has given the market much needed confidence and stability.
Lenders React With Wave of Cuts
Many lenders had already started to reduce their rates ahead of the recent base rate decision and this approach continues with a host of lenders continuing with rate cuts. We have already seen Santander, and a host of smaller lenders, make cuts to fixed mortgage rates for new and existing customers and lenders like Virgin Money and HSBC announcing they’ll lower rates today.
We are now seeing a growing number of lenders in the sub-5% club, offering fixed rates at under 5%. Until last week there had been no fixed rates as low as this since early June.
What Next?
Many of our customers are wondering what their next move should be, with some contemplating fixing for 5 years and others believing a 2 year fix is better suited to their circumstances. No matter your lending needs, we recommend you get in contact with our award winning team, whom, with their consultative approach can help you navigate these uncertain times and help you stay focused on your big picture objectives.
Contact us today on 0208 364 3444 or click here to schedule a free consultation call
UK economy to slow and house prices to fall
Accountancy firm KPMG said the UK economy is “experiencing renewed signs of stress”, while house prices could fall by up to 10 per cent.
The firm’s Economic Outlook September 2023 report said that while worries about a deep recession have largely gone away, the prospects of high interest rates and low productivity are expected to hold back growth in the latter part of the year.
Their report warned that the UK economy would “struggle to keep its head above water” for the remainder of this year as it is experiencing “renewed signs of stress” and that house prices were likely to see a “peak-to-trough drop in nominal prices of around eight to 10 per cent, equivalent to roughly half of the fall during 2007-09.”
Buy-to-let properties being replaced by owner occupiers
A recent survey conducted by e.surv of more than 500 major valuers and surveyors found that 90% of investment properties were sold to buyers who planned to make them their primary residence.
Four in five (79%) surveyors also saw a drop in landlords planning to buy new investment properties in the past 12 months.
It’s no surprise that housing supply has become such an issue, as more landlords have been selling off their stock due to a tougher regulatory environment. One of the most impactful changes was the elimination in mortgage income tax relief, which was replaced by a 25% tax credit.