Bank Rate Cut Improves Market Activity

 

Quealy & Co are delighted to report that the first Bank of England rate cut for four years back in early August has led to an immediate upturn in buyer activity.

The number of potential buyers contacting estate agents about homes for sale has jumped from 11% up on the prior year across the month of July, to 19% up since the 1st of August compared to the same time a year ago

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Confidence To Move Grows

Rightmove raises its 2024 forecast from -1% to +1% due to positive market data and trends compared to the much more subdued 2023:

• The number of sales being agreed is now 16% ahead of the near-peak-mortgage-rate period of a year ago.
• The number of new sellers coming to market is 5% ahead of last year as confidence to move grows.

Rightmove’s weekly mortgage tracker shows that the average 5-year fixed mortgage rate is now 4.80%, an improvement from 5.82% a year ago:

• The best available 5-year fixed rate is now 3.83% for those with a 40% deposit, the lowest a 5-year fixed rate has been since the period before the mini-Budget in September 2022.

The average price of property coming to the market for sale sees a seasonal drop of 1.5% this month (-£5,708) to £367,785. New seller asking prices have fallen in the month of August for the past 18 years, and the size of this month’s drop is in line with the long-term average.

The distractions of school summer holidays traditionally bring a dip in prices, as some buyers put their home-moving plans on hold to enjoy holidays or time with family. This also means that new sellers who do come to market at this quieter time of year may have a pressing need to sell, which means they tend to price more competitively.

However, summer sellers this year may find that there is a degree of buyer buzz around the market that was missing in the peak-mortgage-rate market at this time last year. As anticipated in Rightmove’s July report, the first Bank of England rate cut for four years at the start of the month has helped to accelerate mortgage rate drops and contributed significantly to improved buyer demand.

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Positive Autumn Market Approaching

These better conditions are helping to set up a positive Autumn market, and a further spur to activity following the Bank Rate cut has led Rightmove to raise its 2024 forecast from a 1% drop over the whole of 2024 to a 1% rise in new seller asking prices.

Since the Bank Rate cut on the 1st of August, the number of potential buyers contacting estate agents to view homes for sale is 19% higher than in the same period a year ago. This comparison is with a very subdued period in 2023, when the market was dealing with the fallout of unexpectedly high inflation figures and peak mortgage interest rates.

However, this improvement in the buyer demand trend from +11% across the month of July shows the immediate and strong impact of the first Bank Rate cut since 2020. Agents report that increased political certainty and the improving economic outlook is also helping with buyer interest.

The positive impact of the Bank Rate cut, combined with other encouraging market data, has led Rightmove to revise its end-of-year price prediction upwards — from a 1% drop in new seller asking prices over the whole of 2024, to a 1% rise over the year.

We expect small price rises in the autumn, followed by the usual seasonal monthly falls in prices at the end of the year. Though there are still some uncertainties ahead – October’s Budget, the timing of a second Bank Rate cut, and the US economy to name just three – the scene is now set for a positive remainder of the year. The number of sales being agreed between buyers and sellers continues to track very positively at 16% ahead of last year, and the number of new sellers coming to market is now a stable 5% ahead of this time last year.

Mortgage rates continue to head downwards and have picked up some pace in recent weeks. The average five-year fixed mortgage rate is now 4.80%, which though still high compared with three years ago, before the first of 14 consecutive Bank Rate increases, is an improvement from 5.82% at this time in 2023. Rightmove’s weekly mortgage tracker shows that the best available 5-year fixed rate is now 3.83% for those with a 40% deposit, the lowest that a 5-year fixed rate has been since the period before the mini-Budget in September 2022.

Although it will likely take a few more cuts to the Bank Rate for home-movers to see a more substantial reduction in mortgage rates, it’s home-mover sentiment that has immediately been heightened.  Buyers and sellers are more optimistic about the outlook for the market, evidenced by the immediate upturn that we’ve seen in activity.

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Sellers Must Price Competitively

Though optimism around the direction of mortgage rates is justified, the reality is that they are still very high compared with a few years ago, and there will be some who need rates to drop further before their affordability is notably improved. Buyers are still stretched, and so sellers mustn’t get too carried away by the higher buyer activity levels compared with last year, and continue to come to market with a competitive price.

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Selling Your Home This Autumn

By understanding the current trends, staying informed about future developments, and seeking professional advice when needed, you can navigate the UK property market with confidence.

Quealy & Co are your local estate agents in Sittingbourne and the surrounding areas. We are delighted to bring you our property market updates each month. If you are thinking of buying, selling a property in Kent please get in touch.

Call us 01795 429836 or email hello@quealy.co.uk 

You can also use our instant online valuation tool if you want a ballpark figure of your home's value: Click here

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Article source: https://www.rightmove.co.uk/press-centre/bank-rate-cut-spurs-further-upturn-in-market-activity/