Could cheaper mortgages be on the horizon? The European Central Bank (ECB) has shocked markets by cutting interest rates, sparking hopes that the Bank of England (BoE) will follow suit. The ECB has slashed its key deposit rate to 3.75%, moving faster than both the BoE and the Federal Reserve in loosening monetary policy.

What’s Happening?

The ECB has been pushing interest rates up for months to try and fight inflation. But with inflation now starting to cool down, the ECB has decided to take its foot off the brake and cut rates instead.

This decision has sent shockwaves through the financial markets, with many investors now expecting the BoE to follow suit and cut rates at its next meeting on June 20th.

Will the BoE Follow Suit?

Some experts think it’s a certainty, citing the ECB’s move as a green light for the BoE to act. Justin May, of EHF Mortgages, believes that the BoE will cut rates “immediately”, leading to lower mortgage rates and a boost to the property market.

But not everyone is convinced.

Dariusz Karpowicz remains cautious, pointing to the upcoming General Election and the uncertainty in the UK economy. He believes the BoE might take a more cautious approach, waiting to see how the UK economy unfolds before making any decisions.

What Does it Mean for You?

If the BoE does follow the ECB and cut rates, this could be good news for homeowners. Lower interest rates could lead to cheaper mortgage repayments, providing some much-needed relief for those struggling with rising living costs.

However, the impact on the housing market could be more complex. While cheaper mortgages could make buying a home more affordable for some, it remains to be seen how lenders will react and whether the market will see a significant boost.

The bottom line: The next few weeks will be crucial for mortgage holders and the housing market alike. Keep your eyes peeled for the BoE’s decision on June 20th to see if cheaper mortgages are on the horizon.