The industry has come forward to comment on the Bank of England’s base rate cut, saying it signifies a ‘growing confidence’ in a low inflation environment after Labour started to head the UK government.
The Bank of England has reduced interest rates from 5.25% to 5%, marking the first decrease since the start of the pandemic in March 2020.
The cut comes as a result of wider economic stability and inflation holding at 2% for the last two months. In response to the Bank of England’s announcement on interest rates
Richard Pike, chief sales and marketing officer at Phoebus, said: “The 14 consecutive increases in the Bank’s base rate between December 2021 and August 2023 to its year-long fix at 5.25% have driven up mortgage rates tremendously with a negative impact on the UK property market and the economy.
“That the Monetary Policy Committee has now seen fit to reduce the rate is extremely encouraging for the both the property market and the UK’s economic outlook. Market sentiment has been much improved compared to this time last year.
“Things are finally looking up for originators, and we can expect to see lenders reducing existing borrower and new business rates fairly quickly. Expect competitive pricing in the market across all products moving forward.”
SamLindsay, Mortgage Planning Advisor, My Mortgage Angel, comments on today’s base rate drop:“It was all eyes on the Bank of England today and the rate reduction is welcome move for homeowners, mortgage brokers and lenders alike. What this means is that we should start to see more optimism in the housing market, bringing more movement and activity.
“We may start to see further incremental base rate drops before the year is out with a view to getting some stability back in the market as rates start to move back further towards the 4% mark within the next 12 months.
“Homeowners must keep in mind that if you look at the average between 1995 and 2022, the average interest rate was 5.62%, yet in 1998 the average rate reached a huge 8.87%, and in 2021 the average rate reached 3.59%. I believe we are on a downward trajectory for the average rate, but there are many factors which can affect that. For those wanting to move but are sitting on the fence, waiting for further reductions, buy with your heart – the right time to buy a new home is when it is right for you and your family.”
Andy Lund, Global Co-Head of Houlihan Lokey’s Private Funds Group, said:
“While modest, the announcement of a base rate cut will be welcomed by the financial sector, including private equity. It signals confidence in a continued low inflationary environment and a more normalised lower interest rate environment. This will hopefully help to unlock the historically high back log of PE companies seeking exits and in turn deliver much needed liquidity to Limited Partners. That should introduce further momentum into the PE fundraising market which has been slowly recovering in 2024.”
