The Bank of England’s move to cut interest rates in the wake of the Coronavirus outbreak has been welcomed by property experts.
The Bank’s Monetary Policy Committee unanimously agreed to reduce the main bank rate by half a percentage point to 0.25% at a meeting on Tuesday.
In a bid to encourage lenders to help small businesses, banks have also been given the green light to draw on the financial buffers they have been required to hold since the global financial crisis.
The move will allow banks to offer an extra £200bn in credit to firms facing a cash-flow crisis as a result of the Coronavirus, and its potential effects on the economy.
The Bank said the reduction in the base rate would help to support business and consumer confidence, bolster the cash flows of businesses and households, and reduce the cost and improve the availability of finance.
In a joint statement, outgoing Bank of England governor Mark Carney and his replacement Andrew Bailey, who takes over on 16 March, said the measures were “a powerful and timely package to support UK businesses and households to bridge a temporarily difficult period and to mitigate any longer-lasting effects on jobs, growth and the UK economy”.
Iain McKenzie, CEO of The Guild of Property Professionals, said:“Over the last three years the housing market has proven to be remarkably resistant through all the political factors that have surrounded it, such as Brexit.
“The latest interest rate cut by the Bank of England from 0.75% to 0.25% is only going to strengthen the housing market further because there is so much pent up frustration, and actually, through all the political and public challenges we have faced recently the safest place for your money has been bricks and mortar.
“While the rate cut will have a lesser impact on those who have the cash to purchase a property outright, it will certainly help alleviate some financial pressure on those with mortgages, as well as those looking to get into the property market for the first time.”
Dominic Agace, CEO of Winkworth,added: “This is welcome news and will help to underpin the market. It will be a great boost for many people with mortgages or about to take out a mortgage, particularly the self-employed, who may be concerned about the impact of current events on their income.”
Both RBS and Lloyds yesterday offered support to small businesses, which could prove vital for local agencies if the market falters, as they struggle to compete against the big chains.
RBS has said it is putting aside £5bn to cover emergency loans and has contacted more than 5,000 business customers to offer support. Firms will be able to apply for loan repayment holidays of up to six months.