There is considerable debate about the Bank of England’s upcoming decision on interest rates, with opinions sharply divided. The Bank’s monetary policy committee is scheduled to meet this morning, and their decision is expected to be announced at noon. This announcement will be covered by Landlord Today.
Although the headline inflation rate has recently hit the Bank’s target of 2%, there are lingering concerns about services inflation, which remains high at 5.7%. Additionally, there was an unexpected 0.4% increase in GDP in May, which is double the growth rate that analysts had anticipated.
The situation has prompted Newspage to seek insights from ten industry experts, including brokers and property professionals, to gauge whether the Bank will maintain the current interest rate or decide to lower it.
Ken James, director at Contractor Mortgage Services, commented on the current market conditions: “With the Bank of England’s rate decision coming up next week, buyers and sellers are questioning whether to act now or wait. The market is experiencing significant fluctuations as mortgage rates shift frequently, even before any potential base rate cut. Despite expectations of a rate cut, lenders have been aggressively reducing their own rates, leading to a mini-rate war.
“We are seeing increased activity and interest from buyers. While some may choose to wait for mortgage rates on high loan-to-value (LTV) deals to drop below 4%, others are already moving forward. If these rates do fall below 4%, we might see a surge in mortgage applications. Our role is to guide clients towards the best mortgage products available, based on their needs, regardless of whether it’s the optimal time to buy.”
Chris Barry, director at Thomas Legal, noted: “An interest rate cut of a quarter point in August seems likely. If this occurs, we expect a rush of buyers entering the market, leading to increased competition. This uptick in market activity could cause prices of properties under offer to rise again. Buyers should act swiftly to avoid facing heightened competition for available properties.”
Stephen Perkins, managing director at Yellow Brick Mortgages, stated: “Currently, there are more properties available than active buyers, so a single base rate cut might not immediately shift the market balance in favour of sellers. While the initial reduction in the base rate will likely boost buyer confidence and increase market activity, it will take several months before we see a significant change in supply and demand dynamics.”
Craig Fish, director of Lodestone Mortgages and Protection, commented: “We’ve been advising clients to prepare for the first base rate cut, as it is expected to energise the market and lead to a surge in enquiries. This change could shift the market from being buyer-focused to seller-focused. To avoid missing out, now might be the best time to buy before asking prices start to rise and sellers become more selective.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, advises: “I’ve consistently urged clients not to delay. Waiting for rate cuts could lead to higher property prices, negating any savings on your mortgage. Buyers should proceed with their purchases now, and if rates do fall, they can secure a better deal closer to completion.”
Michelle Lawson, director at Lawson Financial, comments: “The anticipated Bank Base rate cut on August 1 might be the catalyst that boosts the market. Increased demand could drive property prices up, so if you’re waiting to see what happens, now might be the time to act. Delaying could result in paying more for the same property as a buyer, though vendors might benefit.”
Ben Perks, managing director at Orchard Financial Advisers, notes: “Sellers are currently evaluating their options more carefully, leaving buyers in a tougher spot. However, if you’re a serious buyer with a reasonable offer, stay patient and hopeful.”
Harps Garcha, director at Brooklyns Financial, says: “A rate cut in August could increase confidence in the property market after a period of delays. However, it may not immediately boost the housing market. A more likely scenario is a rise in market activity in September, when schools return. We might see more properties coming onto the market from those who have been waiting for a rate drop. This is even more likely if fixed rates keep decreasing over the summer. Buyers should stay cautious, take their time with offers, and avoid rushing, as buying a home is a significant long-term decision.”
Rohit Kohli, director at The Mortgage Stop, notes: “If the Bank of England reduces rates by 25 basis points, house prices might increase due to the high number of potential buyers and the current low stock levels. We’ve consistently advised buyers to move forward if they are ready to avoid missing out, as the market can quickly become more competitive.”
Justin Moy, managing director at EHF Mortgages, says: “We are approaching a point where property prices could fluctuate significantly. As mortgage rates decrease, borrower demand will likely rise, potentially leading to increased market activity. This could also prompt more sellers to enter the market, possibly increasing supply and dampening house price growth. Regardless of the outcome, estate agents are likely to benefit the most from these changing market conditions.”
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