The Bank of England (BoE) announced a reduction in its main interest rate from 4.75% to 4.5%, marking the third cut since August 2024.
This decision was accompanied by a reduction in the UK's economic growth forecast for 2025, now projected at 0.75%, down from the previous estimate of 1.5%. The Bank of England’s Monetary Policy Committee (MPC) expressed concerns over persistent inflation, currently at 2.5%, with the potential for it to rise to 3.7% by the summer. Despite these challenges, the MPC voted to lower the interest rate, with seven out of nine members supporting the 0.25% reduction.
This move is aimed at stimulating economic activity by encouraging both spending and investment, and it also offers several benefits for property sellers. With the main interest rate now at 4.5%, borrowing costs for buyers have become more affordable. This could prompt prospective homeowners to secure mortgages, driving up demand for properties. As a result, sellers may encounter more buyers in the market, potentially helping to sustain or even increase property prices, particularly in more competitive areas.
Moreover, as mortgage payments decrease, homeowners may feel more financially secure, motivating them to proceed with purchasing a new home. This surge in buyer activity could result in quicker sales and a reduction in the time a property remains on the market.
However, sellers should remain cautious of the broader economic outlook, as the UK's economic growth forecast has been revised downwards. This could slow the long-term growth of property values. While the situation remains uncertain, the immediate effect of the rate cut creates an encouraging environment for attracting buyers, something sellers should welcome.
