The current situation in the UK mortgage market is one of unprecedented change. In the aftermath of the Bank of England’s first interest rate cut in four years, high street lenders have been quick to follow suit by slashing borrowing costs. This move has resulted in a significant drop in mortgage rates, with some lenders now offering five-year fixed rate mortgages of under 4%.
The rate cut has sparked a boom in homebuyer activity, with the number of house hunters contacting estate agents for viewings up by 19% compared to a year ago. This surge in buyer interest can be attributed to the improved economic environment and the political certainty gained from the recent general election. The number of new sellers coming to the market has also increased, rising by 5% compared to the previous year.
According to a report from property portal Rightmove, new seller asking prices are expected to rise marginally by 1% in 2024, a positive revision from the earlier prediction of a 1% fall in prices. The director of property science at Rightmove, Tim Bannister, believes that the rate cut has brought some relief to struggling homebuyers and expects activity to pick up further in the coming months.
Looking ahead, the Bank of England will meet on September 19 to make a new interest rate decision. Market expectations currently suggest a 37% chance of a rate cut in September, with this figure rising to 74% for November. Mortgage experts, such as Peter Gettins from L&C Mortgages, believe that many buyers will be closely watching the outcome of the meeting for signals on the future path of mortgage rates. Another potential base rate cut in the next few months could further boost buyer confidence.
The recent developments in the UK mortgage market have created a dynamic and ever-changing landscape for both buyers and sellers. The rate cut has led to a significant drop in borrowing costs, which has in turn fueled an increase in buyer activity. Market forecasts suggest further changes on the horizon, with expectations of additional rate cuts in the near future. It will be crucial for both buyers and sellers to stay informed and closely monitor these shifting trends in order to make the most informed decisions regarding their mortgage options.