'More Aggressive' Interest Rate Cuts On The Horizon

 

The Bank of England could cut interest rates more quickly if price rises remain under control, its governor has suggested.  

Andrew Bailey recently told the Guardian that the Bank could be a “bit more aggressive” at cutting borrowing costs, depending on the rate of inflation.

The Bank cut interest rates from 5.25% to 5% in August, which was the first drop in more than four years.

Mr Bailey also said that the Bank was watching developments in the Middle East "extremely closely", in particular any movement in oil prices that could fuel inflation.

Now that inflation is currently close to the Bank's 2% target, attention has focused on how many rate cuts will be made. A recent Reuters poll found that nearly 80% of economists, 49 of 65, expect one more rate cut this year. But that was before Bailey’s latest comments.

The Bank of England has two more meetings left this year to decide on interest rates, in November and December, with analysts now predicting another rate cut in December too.

Lower borrowing costs can increase demand and push up house prices. However, the broader economic context, including inflation and future interest rate decisions, will play a crucial role in determining the property market's direction.

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How will further rate cuts affect buyers and sellers?

A further cut to interest rates would be a welcome move for property buyers and sellers. Falling interest rates will cut mortgage payments for households who have deals that track the Bank of England rate. However, many mortgage customers have fixed-rate deals, so will not be affected immediately.

When interest rates are low, buyers can consider fixed-rate mortgages to take advantage of low borrowing costs. They can also consider stretching their budget slightly because lower rates will reduce monthly payments.

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How do interest rates affect the property market?

Interest rates affect the property market in many ways, including:

• Borrowing costs: Interest rates determine how much people pay to borrow money to buy a property. When interest rates are low, borrowing is cheaper, which can increase demand and push up house prices.

• Investor activity: Investors may expand their portfolios when interest rates are low, which can increase prices in certain areas of the market.

• Affordability: Lower interest rates can make borrowing cheaper, but if house prices rise sharply, it can make it harder for first-time buyers to enter the market.

• Regional variations: The impact of interest rate cuts may vary across the UK, with regions that have stronger economic growth or high demand for housing seeing more significant price increases. 

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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. 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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