The Bank of England’s decision to slash interest rates has caused a surge of activity in the property market.

For the first time in four years, the Bank of England cut interest rates, making mortgages cheaper and giving hope to aspiring homeowners. Estate agents are buzzing with activity as buyers, spurred on by these lower borrowing costs, are rushing to find their dream homes.

Rightmove, a leading property website, has reported a 19% surge in the number of potential buyers contacting estate agents about properties since the rate cut on August 1st. This follows an 11% increase in July compared to the same period last year.

So, what’s behind this surge in activity?

The Bank of England’s decision to lower the base rate from 5.25% to 5% is the key factor. This move, aimed at easing pressure on households struggling with the cost of living, has had an immediate impact on mortgage rates.

High street lenders have wasted no time in passing on the rate cut to borrowers, making mortgages more affordable. Rightmove reports that the average five-year fixed-rate mortgage has fallen to 4.80%. While this is still higher than before the series of rate hikes that began in 2022, it represents a significant decrease from the 5.82% rate seen earlier this year.

Experts predict further rate cuts and a busy autumn for the property market.

Rightmove has revised its house price forecasts upwards, now predicting a 1% rise in asking prices for 2024, compared to a previous prediction of a 1% drop. This optimism is fueled by the expectation that the Bank of England will further reduce interest rates in the coming months. Financial markets are betting on rates falling as low as 3.5% by the end of next year.

What does this mean for you?

• For buyers: Lower mortgage rates mean it’s a great time to jump into the property market. However, be aware that competition is fierce, so be prepared to act quickly.
• For sellers: The increased buyer demand could work in your favour. With more potential buyers, you’re more likely to get a good price for your property.

It’s not just lower mortgage rates driving the market. Experts believe that factors such as increased political certainty after the recent general election and a more positive economic outlook are also contributing to the surge in buyer interest.

While there’s positive news for the property market, challenges remain.

Despite the positive signs, it’s important to remember that borrowing costs are still higher than three years ago. Housing affordability remains a challenge for many.

Experts predict that while the market is likely to remain active, factors such as the upcoming budget and the number of homeowners due to come off favourable mortgage deals in the near future will likely prevent runaway price growth.