Bank of England announcement. Rates finally cut! BOE reduces base rate to 5%, finally good news for homebuyers
The Bank of England have voted 5 – 4 to reduce the base rate to 5% This can only be viewed as good news for home owners and potential buyers and sellers alike.
This is the first downward movement in rates since the rises began at the end of 2021.
Fixed rate mortgages are priced in line with the Sonia swap rate and these have been nudging down recently in expectation of a cut. As Finally the BOE reduces base rate to 5% we should see further movement in retail rates.
If you combine lower interest rates with lower house prices then buying a home is certainly at it’s most affordable for a while. If things carry on in the same direction we should see rates below 5% for most borrowers. At this moment in time the best 5 year fix for a loan to value of 60% is 3.99% and at 90% loan to value it is 4.75%. 2 year rates start from 4.39%.
What does this for people wanting to buy for the first time or move house?
The combination of mortgage rates starting to ease in the short term and house prices at a more reasonable level should start to unlock a difficult housing market. We are seeing an uptick in people enquiring about moving house and our estate agent colleagues are busy valuing houses once again. Ultimately people need to move for various reasons but have been put off during a time that has been very uncertain, we are seeing some confidence returning to the market and todays interest announcement should cement this further.
If you have been delaying that move or purchase then it may be worth a call to see how the land lies, you may be surprised.
What effect will this have on my current mortgage when my current deal finishes?
If you are soon to be coming off a fixed deal then there’s no denying that your monthly payments are likely to be higher. On a positive note we hope to see rates relaxing in the coming months so the increase may not be as bad as you were expecting. That being said it is a gamble to delay picking a new rate hoping that they fall prior to your deal ending.
If your mortgage product is within six months of ending you can secure another rate now. Having secured a new product you can feel comfortable that you have something lined up. If interest rates are cheaper when your existing product comes to an end we can compare what you have secured now with what’s available at the time and move you onto the cheaper deal.
What does this mean for the mortgage market?
This is a big step in the right direction. As the BOE reduces base rate to 5%, we should see some further movement on interest rates in the short term but we are already seeing movements downwards in the markets lenders secure their rates from. If inflation continues it’s general downward trend then hopefully things will ease over the coming weeks and months.
How can we help?
As independent Brokers we have real time access to rates as they change. If you just want a quick conversation about what your mortgage may look like in the future or you’ve been putting off moving then we will be happy to help you make an informed decision.
The first step is a conversation with one of our experts.
If you’d like to learn more about mortgage products and how we can help you, please don’t hesitate to get in touch with our team. We’re here to help you navigate the ever-evolving world of mortgages and guide you toward a brighter, greener home.
Your home may be repossessed if you do not keep up repayments on your mortgage. the information contained within was correct at the time of publication but is subject to change.