In the news this week: reaction to the base rate cut

There was a welcome boost for millions of homeowners and borrowers with the Bank of England’s decision to reduce the base rate by 0.25% to 4.25%.

Most commentators have given a thumbs-up to the move.

“A step in the right direction,” was how Ross McNally, Chief Executive of Hampshire Chamber of Commerce, described it, adding: “It’s a cautious measure of relief at a time when there are indicators of lower UK inflation after such a long period of enduringly high rates. It is a measured response to downward inflation amid ongoing uncertainty around global trade tariffs. Most businesses expect the Bank to remain cautious and tread carefully on future rate cut decisions. The Bank is right to take balanced, measured steps and be responsive to the wider economic picture while continuing the fight against inflation.”

Among property sector media, BTL Insider reported reaction from various industry insiders that the rate cut would strengthen confidence among landlord borrowers, open up more options for remortgaging and further the scope for investment in sustainable portfolios.

As well as landlords, the decision will of course be of more benefit generally to those homeowners on variable rate and tracker mortgages.

The Guardian reported analysis by the banking body UK Finance that a typical tracker-mortgage customer will see monthly payments fall by £28.97 as a result of the decision.

In its reaction, RightMove said mortgage providers had been expecting a cut and priced in onward rate reductions accordingly.

The property portal’s news page reported: “Mortgage rates have continued to come down slowly in recent weeks. The average rate for a 2-year fixed rate mortgage has fallen by 0.05% to 4.64% compared to a week ago, while the average rate 5-year fixed rate is now 4.60%.”

In coverage just ahead of the Bank’s move, BBC News quoted the chief economist of the International Monetary Fund, Pierre-Olivier Gourinchas, as forecasting further cuts being on the cards this year.

The Bank’s decision is also a good piece of news to follow the lowering of the Stamp Duty payment thresholds at the beginning of April which some commentators have feared would impact the residential property sector.

Let’s hope the base rate cut continues to encourage market confidence through the second half of this year and beyond.

If you are a homeowner, landlord, tenant or prospective seller or buyer, and want to discuss your next property move, we’re here to help. Contact us on 02392 826731 or visit www.chinneckshaw.co.uk.

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