The Bank of England has voted to decrease the base rate by 0.25%, lowering from 5.25% to 5.00%.
The Monetary Policy Committee (MPC) voted 5-4 to lower the rate.
This move comes after seven consecutive holds, following the MPC’s initial decision to set the rate at 5.25% in August of last year.
Prior to this, the rate had seen 14 consecutive hikes by the central bank, in its bid to curb inflation.
This news comes as many commentators urged for potential base rate decrease, in light of inflation finally reaching its 2% target, and overall economic conditions beginning to improve.
Reaction:
Nicholas Mendes, mortgage technical manager and head of marketing at John Charcol:
“Today’s Bank rate reduction announcement is a positive step for the property and mortgage market, marking the first interest rate cut in over four years finally kick starting the downward bank rate cycle.
“Positivity spreads quickly and while today’s rate cut would have already been priced in, this will undoubtedly revitalise activity.
“Mortgage holders nearing the end of their fixed-rate period and prospective buyers can now make informed decisions with greater confidence, rather than delaying and speculating.
“For borrowers approaching the end of their fixed-rate terms, this decision brings a much-needed sigh of relief following months of fluctuating mortgage rates and reductions not aligning with early market expectations.
“Nationwide recently became the first high street lender to reprice mortgage rates below 4% again, and others are expected to follow suit.
“We can anticipate the downward trend in fixed-rate costs to continue into next year, as markets price in further Bank Rate cuts and lenders use every opportunity to stay ahead of the competition by actively passing on reductions in swaps, with this in mind a 3.5% 5-year fixed rate could be within reach by Q1 next year.
“Leading up to the MPC meeting, financial markets were evenly split on whether a rate cut, or a hold was imminent. Within the MPC, there had been support for a rate reduction.
“Two of the nine committee members had already started voting for rate cuts, while two or three others were visibly resistant, leaving four- or five-members undecided.
“June’s meeting revealed that many officials viewed the decision as finely balanced, and little has been heard from policymakers since the general election.
“The main argument for holding the Bank rate longer was the need for more evidence to confirm that inflation will remain low and stable, with some cautioning that premature rate cuts could reverse the progress made in controlling inflation.
“Overall, this rate reduction is a promising sign for the future, bringing much-needed relief and confidence back to the property and mortgage market.
“Let’s also take a moment to recall Governor Andrew Bailey’s previous comments suggested that the Bank could cut rates faster than markets expect, making a total of three rate cuts this year a possibility.”
Nathan Emerson, CEO of Propertymark:
“Today’s rate cut it is excellent news for the housing market and no doubt a huge sigh of relief for those who have felt the pain of higher interest rates for the last two years.
“Summer is traditionally a busy time of the year for the housing market, and today’s base rate cut should hopefully provide a new wave of confidence and affordability for many.
“With a new government in power that is committed to delivering near two million new homes Propertymark hopes today news is a real turning point for homeowners and those who aspire to buy.”
Peter Stimson, head of product at MPowered Mortgages:
“After months of hints and speculation, the Bank of England has finally begun to ease the interest rate squeeze.
“With consumer inflation stabilising, the Bank has decided that its high interest rate policy is holding back economic growth unnecessarily, and it’s now time to remove the handbrake.
“Provided inflation stays under control, the Bank may reduce the Base Rate again later this year. While most analysts are predicting that there could be two Base Rate reductions this year, there are no guarantees and no-one should expect interest rates to return to the very low levels we grew accustomed to in the 2010s.
“Good though today’s news is, this first Base Rate cut won’t instantly translate into every mortgage lender cutting their interest rates.
“Last night MPowered reduced the rates we offer to new mortgage customers, and we are committed to offering some of the UK’s most competitive interest rates.
“But across the wider mortgage market, the reduction in interest rates is likely to be more like the tide going out than a dam bursting.”
Matt Harrison, director of sales for finova Broker:
“Today’s decision by the Bank of England to reduce the base rate to 5% is a welcome move for both businesses and consumers alike.
“In the current climate, this reduction offers much-needed relief and the potential to stimulate growth.
“For our members, lower borrowing costs can invigorate the market, drive more volume, and utilise technology to drive efficiencies as the market gains confidence.
“The decision along with the recent General Election marks a step in the right direction towards fostering a more resilient market.
“It is important now to leverage this opportunity providing reliable services to help our clients navigate the evolving financial landscape.”
Simon Webb, managing director of capital markets and finance at LiveMore:
“Today’s decision by the Bank of England to reduce the base rate to 5% marks a significant moment for the financial markets and the broader economy.
“This move, while somewhat anticipated given the recent economic indicators, is a clear signal of the Bank’s response to emerging economic challenges and their commitment to fostering a more stable financial environment.
“We welcome this decision. The reduction is poised to bring relief to older borrowers, potentially lowering the cost of mortgages and other loans, which can stimulate spending and investment.
“This development offers an opportunity to reassess their financial strategies and explore the many options available to older borrowers which are often overlooked.
“However, it’s essential to approach this change with a balanced perspective. While lower rates can boost economic activity, they also require vigilance in managing risks associated with borrowing and lending.”
Gary Wilkinson, CEO and co-founder of Redwood Bank, said:
“The Bank of England’s decision to reduce base rate is positive news for businesses, particularly those with variable rate mortgages.
“Professional landlords will welcome this reduction as mortgage finance forms a significant part of their costs.
“Those with variable rate mortgages should see an immediate reduction in their borrowing costs, boosting their margins and increasing their ability to invest in growing their businesses.
“Landlords and other businesses looking for a new commercial or residential buy-to-let mortgage or wanting to refinance an existing mortgage may also benefit. “Businesses with surplus funds could consider fixed rate savings accounts to lock in their interest rate.”
Nick Hale, chief executive officer at Movera:
“After months of anticipation, the Bank of England’s base rate cut today, albeit small, is to be warmly welcomed.
“Hopefully, this news should give the market a much-needed shot in the arm as potential housebuyers may now have the confidence to take the plunge.
“The market will no doubt be breathing a huge sigh of relief along with those borrowers on tracker mortgages and standard variable rates.
“The cut comes hot on the heels of the General Election which should usher in a period of increased political certainty.
“The new Government’s ambitious housebuilding plans alone are expected to boost supply in the longer term.
“Our focus at Movera will be on providing fast and reliable services for those who can now look to move or remortgage this year with more confidence.”
Sarah Pennells, consumer finance specialist at Royal London:
“Finally, after a year of Base Rate holding firm, the Bank of England has made the decision to lower the rate by 0.25%.
“This is the first time the rate has reduced since it was dramatically cut to 0.1% in April 2020 and will be welcome news for mortgage holders who will now be hoping this rate cut is followed by others in the coming months.
“We know that many homeowners have been struggling with the effects of high interest rates.
“Our latest Financial Resilience research showed that those with a mortgage have been paying £362 more in housing costs a month when compared with the same time a year ago.
“Worryingly, one in eight of those whose mortgage costs had risen were planning to use either a credit card or overdraft to cover the additional cost.
“Ahead of this reduction, lenders have been making cuts to the on-sale mortgage rates with a number of big-name lenders announcing lower rates through the last week.
“This will be a welcome reprieve for borrowers who were worried about remortgaging to a, possibly, much higher rate.
“Although savings rates have been favourable more recently, it will be interesting to see how providers react to this change in Base Rate.
“It’s vital that savers shop around to see whether there is a better rate available for them if they start to see the interest rate on their current savings account reduced.”
Mark Hollands, head of sales and distribution, Bluestone Mortgages:
“Would-be and current borrowers across the country will no doubt be letting out a huge sigh of relief following today’s much-anticipated decision, as rates fall from their historic 16-year high.
“This move should boost consumer confidence and help stimulate activity in the mortgage market. For those looking to secure a mortgage in the current environment, seeking the advice of a mortgage broker should be their immediate next step.
“With access to whole of market, these professionals can point would-be and existing borrowers in the right direction.
“Whether they are looking to step onto, or up the property ladder, brokers are there to help them navigate the wide range of products available to help their homeownership dreams come true.”
Aman Bajwa, director and co-founder of Fairbridge Capital:
“Today’s decision reinforces the positive sentiment that has been growing in the property market in recent weeks, and could be the catalyst that many potential investors needed to begin, or expand, their portfolios.
“While the buy-to-let market has faced significant challenges over the last year, including higher mortgage rates and regulatory uncertainty, there is a wealth of opportunities on the horizon for more experienced landlords, particularly given the fact that Labour’s commitment to building new houses should address a chronic shortage of rental properties
“Flexibility will remain critical for investors to take advantage of these opportunities as and when they arrive.
“At Fairbridge Capital, we are committed to helping our customers get access to finance exactly when they need it, to give them the best chance possible of making a successful investment.”
Paul Glynn, CEO at Air:
‘’Today’s base rate cut to 5% is one which will be welcomed by many, providing a much-needed boost to consumer confidence as we head towards the Autumn Budget.
“However, many lenders had already priced the cut into their fixed rate products ahead of time, so this won’t result in any immediate downward pressure on mortgage rates more broadly.
“The market is steering towards a more manageable economic climate, but there are still difficulties that lie ahead for borrowers that aren’t going to disappear immediately.
“Asking prices are nearing record high levels and the reality is wage growth hasn’t gone nearly far enough to keep up.
“Later-life lending, which is affected by gilts, presents one possible solution for older homeowners who may have to manage mortgage repayments in retirement.
“Engaging in conversations with consumers on working solutions, including later-life lending, at an earlier stage must become the norm to secure good customer outcomes.”
Ben Waugh, managing director, more2life:
“As many industry experts predicted, the market has triumphed over recent challenges, prompting the Bank of England to cut its central rate today.
“Naturally, this is great news for homebuyers and those refinancing residential mortgages, as borrowing costs become more affordable.
“Today’s announcement will likely prove a catalyst for more activity in the coming weeks and months.
“With a range of more affordable options now available, advisers will play a crucial role in helping borrowers cut through the noise and secure the best deal for a stable financial future.”
Rob Clifford, chief executive officer at Stonebridge Group:
“While the Monetary Policy Committee’s (MPC) decision isn’t a surprise, it will still come as a relief to millions of borrowers, particularly those with mortgages tracking base rate.
“Higher rates have had a dampening effect on the property and mortgage markets. Therefore, the news is likely to result in a boost in purchase enquiries and wider market activity.
“With today’s decision widely expected, many lenders moved to cut their rates in advance of the MPC’s vote.
“However, now that borrowing costs are lower, it provides lenders with scope to introduce further cuts in the coming weeks.
“Last week we saw the return of the first sub-4% mortgage for the first time since April. Now the MPC has made its move, I wouldn’t be surprised if these become more commonplace as we reach autumn.”
Tony Hall, head of business development at Saffron for Intermediaries:
“The long-expected base rate cut has finally arrived, bringing with it a boost to consumer confidence.
“Alongside this, we’re already seeing rising optimism, with the Bank of England noting that mortgage borrowing increased to £2.7bn in June from £1.3bn in May.
“However, it’s important to keep in mind that many lenders have already priced in the base rate cut on their fixed rate products.
“Despite this, it’s clear that the market is on the up, and with Angela Rayner laying out her plans to revamp the planning system earlier in the week, targeting 1.5 million new homes over the next five years, there’s an increasing amount to be positive about.
“As rates drop further, borrowers may be drawn to new mortgage deals, but consulting a professional financial adviser is key.
“They have the experience to find the best fit for your situation. The outlook for the mortgage market is very bright, with expectations of increased activity as the sector grows, and professional advice ensures you navigate this landscape wisely.”
Kevin Roberts, managing director, Legal & General Mortgage Services:
“After four years, a cut to the central rate is a significant milestone, bringing with it a new and promising chapter for the property market.
“Lenders have already been lowering product rates in recent weeks based on long-term forecasts, putting us on course for 1.1 million sales this year.
“Confidence and excitement around the market has been building, and today’s decision could be the catalyst for consumers to push ahead and get their home moves over the line.
“If you are weighing up a move following today’s decision, a professional mortgage adviser can cut through the noise and help you navigate a complex market.
“Enlisting the expertise of someone with years of industry know-how is your ticket to making a decision you can be confident in.
“And while it might not be something typically on your radar, advisers can unlock exclusive products that would otherwise be out of reach.”
John Phillips, CEO of Just Mortgages and Spicerhaart:
“At long last, the Bank of England has finally made the right decision and cut the base rate. The reality is this needed to happen, not just to breathe some life into the economy, but to help take some of the pressure off borrowers – particularly those on a tracker or on Standard Variable Rate (SVR).
“While we may not see lenders react instantly to today’s news – as many have already priced in a cut and made reductions accordingly – it’s likely to be the starting pistol for increased competition amongst lenders.
“All have their own targets to hit and need to lend to make money, so it’s only right to expect greater activity as they look to increase volumes and market share.
“Today’s news will likely be the impetus for many potential borrowers or movers to return to the market and get their plans back on track.
“If there’s ever been a time for brokers to be proactive and present in their local community, this is certainly it.
“As potential clients look to navigate a changing market, that whole of market access offered by a broker is hugely valuable. It’s our job to remind borrowers of this.”
Nick Leeming, chairman of Jackson-Stops:
“The Bank of England has today held firm in its commitment to cut the base rate to 5%, the first rate cut since 2020.
“Despite goods inflation unexpectedly remaining stubbornly high in June, the recent General Election result has positioned the UK well for a period of greater certainty – something that had been well missed in recent years.
“For the property market, the hope is that a cut to the base rate will stimulate greater optimism and activity from buyers and sellers, with the likelihood that a reduction in mortgage rates will follow suit swiftly to ease affordability decisions.
“It will be particularly significant at the lower end of the market which will then create opportunities for movement in the middle and top end where there has been a smaller pool of buyers and properties to choose from in recent years.
“Whilst many moving decisions are unavoidable driven by lifestyle decisions such as schools and jobs, those with more speculative but less urgent reasons to make their move have been on a temporary hold.
“A cut to the base rate is exactly what is needed to power up leisurely buyers, opening up market opportunities more broadly.
“There are early signs of this trend across the Jackson-Stops network, in which instructions and listings in June were up year-on-year.
“This immediate uptick in supply will give buyers more choice and should support market growth as political reticence makes way for economic clarity.
“Positively too, exchanges have remained steady year-on-year across the Jackson-Stops national branches, demonstrating the markets broader resilience against macro-headwinds.”
Jonathan Bone, lead mortgage adviser at Better.co.uk:
“At long last, it’s time to pop the cork! The Bank of England has finally lowered the base rate to 5% after a year of holding steady at 5.25%.
“While this is a huge relief for millions of homeowners who have been struggling with high mortgage rates, it’s infuriating that it took this long.
“The Monetary Policy Committee’s prolonged inaction has caused unnecessary financial strain and uncertainty for countless families.
“The Bank of England’s indecision has inflicted financial strain on homeowners, many of whom have grappled with higher mortgage rates as they remortgage.
“While a reduction might not drastically change mortgage rates immediately, it would provide a crucial signal to first-time buyers and those looking to move that now is the time to buy and sell.
“This prolonged inaction has been a bitter pill to swallow, and it’s crucial that the Bank of England doesn’t keep the rate at 5% for too long, especially with inflation now sitting at its target.
“Homeowners and first-time buyers need consistent support, and we hope the Bank of England will continue to make decisions that foster a healthier housing market.”
Tobias Gruber, CEO of My Community Finance:
“The Bank of England’s decision to lower the base rate is a long-awaited relief for borrowers, but it’s frustrating that it took this long.
“Homeowners and borrowers have struggled under high interest rates for an entire year despite inflation hitting the target. This cut should have come sooner.
“For savers, the window to secure high interest rates is closing fast. When one provider changes their rates, others will follow quickly.
“Don’t wait—check your current savings rates and consider moving your money to an account that still offers over 5% interest.
“Fixed-rate savings accounts are still offering great rates, but you need to lock in now to avoid losing out. Ensure you have emergency savings accessible since fixed-rate accounts typically don’t allow withdrawals.
“Don’t assume your bank is the best option. Banks have been slow to pass on interest rate increases to savers, a point even highlighted by the FCA last year.
“It’s crucial that you vote with your wallet to show banks that this doesn’t pay. Online challenger banks, credit unions, and building societies are offering very competitive rates, so shop around to maximise your returns.”
Michael Foote, editor-in-chief of comparison site, Quotegoat.com:
“The decision to lower the base rate today brings a welcome relief to borrowers, many of whom have been struggling under the pressure of high interest rates.
“Lower interest rates mean borrowing money becomes more affordable, which can significantly benefit individuals and families relying on credit.
“Landlords with mortgages on rental properties will face reduced payments, potentially easing the pressure on tenants and making renting more affordable.
“First-time buyers, who often depend on mortgages, will find it slightly easier to achieve homeownership with reduced mortgage costs. This rate cut can help more people realise the dream of owning a home.
“However, while this is a positive step, it’s crucial for the Bank of England to remain attuned to the ongoing challenges in the housing sector.
“Continuous efforts are needed to ensure that the benefits of lower interest rates reach everyone, from renters to prospective homeowners, and help alleviate their financial burdens.”
Duncan Kreeger, CEO and founder of TAB:
“Today’s interest rate announcement is extremely welcome and comes at a time of increasing market confidence. Lowering interest rates will help unlock capital, drive investment, and contribute to an improving economy.
“Reduced political uncertainty combined with changes to the planning framework and today’s interest rate decision mean that the commercial property sector is well-positioned for a busy second half of 2024.
“At TAB, we have seen increases in loan and mortgage enquiries over the last few weeks as well as more completions and we expect the Bank of England decision to be a catalyst for further activity.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Finally, the Bank of England has made its much-anticipated move and cut interest rates from a 16-year high.
“This will give borrowers an affordability boost, ease pressure on household finances and in doing so, assist the wider economy.
“Even if the new Labour Government manages to magic up an additional 300,000 homes this year, there is still a serious affordability issue for first-time buyers.
“Any base rate reductions will be passed on via lower standard variable rates and to some extent headline rates, which will have a positive impact on borrowing boundaries.
“Fixed rates are influenced by future base-rate movements and therefore not directly linked to what happens this week.
“Indeed, this rate cut has already been factored into mortgage rates with numerous lenders reducing their fixed rates in recent days on the back of declining swap rates, with a sub-4% 5-year fix now available for new purchases.
“Those on base-rate trackers will find their mortgage rate reduce by 0.25%. A borrower with a £250,000 repayment mortgage on a 25-year term and a pay rate of 5% will see that fall to 4.75%, with monthly payments falling from £1,461 to £1,425.
“With a variable-rate deal, the link between the lender’s variable rate and base-rate moves are less transparent. The lender may decide to pass on none, some or all of the base-rate cut.
“The next question is when the Bank will reduce rates again, and whether we will see another cut in September or November.”
Sanjay Gadhia, head of sales at Standard Life Home Finance:
“Today’s decision to cut the central rate from 5.25% to 5% is a significant moment for the market.
“It is great news for both buyers and sellers, and there’s no shortage of options for borrowers to choose from, with the latest data indicating that first time buyers enjoyed an increase in the number of available products in the second quarter of this year.
“In a dynamic market, getting good quality financial advice has never been more important.”
Arjan Verbeek, CEO of Perenna, said:
“Many will be rejoicing that the base rate has finally experienced its first cut since hikes began in December 2021, but in reality, consumers will soon feel short-changed as they still won’t be able to access affordable mortgage products.
“Affordability is not actually linked to the headline mortgage rate on traditional mortgage products – but to the reversion rate or SVR.
“This is why we have an affordability crisis. So regardless of which way the market moves, unless the SVR reduces, we aren’t going to enter a promised land of extensive home ownership. The problems are systemic.
“Want real change? Let’s start innovating and get other types of mortgage products on the market which not only help hardworking families onto the ladder but also protects them from economic shocks.”
Mark Michaelides, chief commercial officer at Molo:
“The Bank of England’s decision to reduce interest rates to 5%, despite sticky services inflation, is significant for borrowers.
“This first rate cut since 2020 will have an immediate positive cash flow impact for those on tracker mortgages and could boost mortgage demand in the near to medium-term by making borrowing more affordable.
“This rate cut marks a pivotal moment for the mortgage market, providing confidence to borrowers and stimulating the housing market.
“However, it remains to be seen whether this is a one and done cut for the next cycle or if there are further cuts to come in 2024.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“In our view, when the interest rate decision has been so close to call it means the impact on the market will be relatively minimal one way or the other.
“Of course, some buyers have been holding off in anticipation of a cut for some time but mortgage rates ‘on the street’ have been softening over recent weeks anyway.
“The approximate 40% of buyers who are not dependent on finance will probably be negotiating just as hard to take advantage of their better bargaining position.
“This reduction in rates to 5% will certainly act as a shot in the arm for activity and buyer affordability over the short term at least, complemented by a strong employment picture.”
Neil Rudge, chief banking officer for Commercial at Shawbrook:
“The long-awaited rate cut has finally been announced, with the MPC taking the plunge and voting to cut the base rate for the first time since 2021.
“This move will likely provide the UK’s business community with a much-needed boost, as economic conditions also show signs of improvement.
“The potential for reduced borrowing costs should give businesses the confidence to kickstart plans that may have been put on the back burner in recent years.
“We continue to experience strong demand for funding from midsize businesses across various sectors, indicating prevalent optimism and a focus on growth among the UK’s SMEs.
“We expect a further boost with this news. As economic conditions improve, businesses with a growth mindset are increasingly looking to implement plans that may have been on hold this time last year, a positive sign for the UK economy moving forward.”
Guy Gittins, chief executive officer at Foxtons:
“Today’s base rate reduction will come as a welcome surprise for the nation’s homebuyers and one that will only add to the property market momentum that has been building so far in 2024.
“We’ve already seen monthly mortgage approvals sitting at consistently high levels as pent-up demand across the market has been released and, in recent weeks, mortgage rates have continued to trend downwards, with several five year fixed term mortgages available with rates below 4%.
“With interest rates now starting to fall, we only expect that these positive property market trends will intensify.”
Jason Ferrando, CEO of easyMoney:
“Mortgage market activity has been building steadily so far this year and while today’s cut may be marginal, we can expect it to act as a shot in the arm for the sector and one that will spur more buyers to get off the fence and get on with their plans to purchase.
“What’s more, today’s cut is likely to be the tip of the iceberg and we could well see another before the year is out, which will only help to fuel market momentum further.”
Jonathan Samuels, CEO of Octane Capital:
“We’ve seen a far more settled landscape materialise since the base rate was held at the back end of last year and this stability has been key to the slow but steady recovery of the property market in 2024.
“However, today’s somewhat surprising decision to cut rates for the first time since March 2020 is likely to stoke the furnaces with respect to buyer demand levels and accelerate this recovery at a greater pace than expected.
“We’ve already started to see swap rates reduce in recent weeks, which suggest that mortgage rates are soon to follow, but it’s likely that many lenders will now act sooner rather than later which will help ease the cost of borrowing for the nation’s homebuyers.”
Ryan McGrath, director of second charge mortgages at Pepper Money:
“The property market is hopeful that today’s decision by the Bank of England to lower the base interest rate will inject new energy into searches and sales of homes.
“The fire may now reignite for prospective buyers who have been adopting a ‘wait and see’ approach, now finally having the certainty they need to press on with their move.
“The expectation is that this base rate cut will be the vote of confidence lenders need to reduce rates after seven static decisions from the Bank of England.
“This is likely to be a small sigh of relief for those having to manage high levels of unsecured debt, but still makes borrowing a much more expensive option than two years ago.
“For homeowners who are juggling significant amounts of unsecured debt and want to avoid paying interest across multiple loans or credit cards, then bringing debt together with a homeowner loan could be a more manageable long-term option.
“For mortgage holders looking at today’s rate cut, the hope is that this will result in greater movement in the market, allowing for more stock to become available and therefore more choice to press on with their purchases.
“This could usher in a new cohort of homeowners who, as they establish themselves, may consider putting their own stamp on their property in the form of home improvements.
“Homeowner loans can be another way for homeowners to fund these works without interrupting their current mortgage rate, particularly important for those who may be on more favourable fixed rates.”
Gareth Lewis, managing director of specialist lender MT Finance:
“Today’s announcement is a positive move that will surely invigorate consumers as affordability becomes more achievable.
“However, there must be a mindful eye kept on inflationary figures before the MPC meets again, and the government needs to play its part in continuing a positive market stimulus.”
Sam Mitchell, CEO of Purplebricks:
“The housing market is finally kicking back into action following a pause for breath around the General Election.
“The Bank of England’s decision to cut interest rates today will supercharge this recovery.
“Already, buyers are leaving the market lull behind to forge ahead with purchasing decisions.
“However, for first-time buyers, the primary challenge remains firmly in place: the rental market is still a complete mess.
“Labour will need to push ahead with their plans to ‘get Britain building’ and construct more social housing if it’s to lower the barriers to homeownership for first-time buyers.
“The hope is that these measures, when combined with rates coming down for landlords, should make the rental market more bearable for tenants and help them save for a deposit to finally become a homeowner.”
Andrew Gething, managing director of MorganAsh:
“This is the news that many would have been hoping for, especially those households on tracker or variable rate mortgages who will feel this almost immediately.
“That little bit of relief will be hugely welcome given the immense pressure that has been put on household budgets for a sustained period of time, and the impact this has on health and wellbeing, and living standards more broadly.
“Of course, we are not out of the woods just yet. Interest rates remain very high and households across the country still face difficulties.
“With Consumer Duty now in force across all of financial services, it’s an important reminder for firms to stay vigilant and continue efforts to identify vulnerable clients and stay close to them. Good data is absolutely essential to this.
“With the central bank now making its first move, the hope for many will be that a second cut will follow later in the year as predicted.
“This growing momentum will not only give lenders the platform to re-price and increase competition, but it will hopefully take the edge off strict affordability requirements which are stopping many borrowers from accessing a better deal.”
Richard Dana, founder and CEO of Tembo mortgages:
“For customers who either want to buy their first home or who are looking to remortgage – a reduction in the base rate has largely been priced in already.
“There are already 5-year fixed rate mortgage deals for 3.99%, compared to the previous base rate of 5.25% – which indicates where the market expects rates to end up over the next few years.
“We wouldn’t expect to see a huge movement in rates on fixed term products after a base-rate cut – particularly as one was expected earlier in the year.
“Variable and tracker rates will reduce – which accounts for an estimated one in four mortgages, so these customers will see an immediate reduction in monthly repayments.
“The base rate is also a key driver of consumer confidence. The most significant change that we would want to see is an increase in confidence levels.
“We have thousands of customers who are waiting for the base rate to drop before they buy.
“While not a huge amount will change in terms of interest rates, it will signal to customers that the worst is over and they can get on with their home-buying plans.
“It will be interesting to see if this happens after the first cut or if we will need to wait a little longer for that confidence to kick into the property market.
“It certainly feels like there is significant pent-up demand, and with rental costs as they are, we are expecting a busy time ahead particularly in the first-time buyer market.”
Richard Pike, chief sales and marketing officer at Phoebus:
“The 14 consecutive increases in the Bank’s base rate between December 2021 and August 2023 to its year-long fix at 5.25% have driven up mortgage rates tremendously with a negative impact on the UK property market and the economy.
“That the Monetary Policy Committee has now seen fit to reduce the rate is extremely encouraging for the both the property market and the UK’s economic outlook.
“Market sentiment has been much improved compared to this time last year.
“Things are finally looking up for originators, and we can expect to see lenders reducing existing borrower and new business rates fairly quickly.
“Expect competitive pricing in the market across all products moving forward.”
Jonathan Moyes, head of investment research at Wealth Club:
“Hopes of a rate cut were granted today as the Bank made the bold decision to cut rates for the first time since March 2020.
“Whisper it quietly, but an economic revival appears to be gathering pace.
“Recent survey data suggests the UK’s services and manufacturing sectors are performing strongly, unemployment remains low, house prices have resumed their upward trend, and the country is in a rare state of political stability.
“With the UK on such a positive path, the interest rate cut will add further fuel to the UK’s recovery, but this does pose questions over whether the bank risks unnecessarily stoking inflation.
“By the Bank’s own forecast, inflation is set to rise to 2.75% in the second half of 2024.
“Looking ahead, the Bank of England remains damned if it does, and damned if it doesn’t.
“All eyes will now be on sterling, with the Federal Reserve choosing to keep rates on hold yesterday, sterling has weakened in the minutes following the announcement.
“Too much of this, and the Bank may regret its newfound assertiveness.”
Karl Wilkinson, CEO at Access Financial Services:
“This was a close call, with four out of the nine Monetary Policy Committee members voting to hold the Bank Rate at 5.25%.
“The August Monetary Policy Report contains ongoing concerns around inflation, with CPI inflation expected to increase to just below 2.75% while services CPI remains high at 5.7%.
“However, this is great news for the property market, which is in quite a different shape compared to last year.
“Market sentiment and consumer confidence is up, and I expect we’ll see a lot more movement now in the second half of 2024.”
