Interest rate boost for property sector expected today
Bank of England Governor Andrew Bailey could announce a cut in the base interest rate, which would help the housing market after a blow in last week's Budget.
The Bank of England is expected to announce an interest rate cut today in a move that would give another boost to the housing market.
Governor Andrew Bailey (main picture) and the other members of the Bank of England’s Monetary Policy Committee decided against a cut last time they met in September, but could well decide the time is right to reduce the rate this month.
The current rate of 5% could be reduced to 4.75%, after a 0.25% cut in August, and ahead of a possible further reduction in December.
Inflation war
Many experts expected the Bank to hold the rate last time, but to make a cut in November and December once it considers the war on inflation is won.
Inflation currently stands at 1.7% and was 2.2% the last time the MPC met, so that might be a factor influencing the Bank’s decision makers.
The effects of last week’s Budget on the housing market are still uncertain, with a hike in Stamp Duty from 3% to 5% on buy-to-let properties possibly acting as a brake on new investment purchases.
House prices are expected to return to consistent year-on-year growth.”
Meanwhile Savills is predicting average house prices are set to increase by £84,000 or 23.4% over the next five years. It also expects house prices to rise by 4% in 2025, as mortgage rates ease.
“With inflation returning to the 2% target and the prospect that interest rates will continue to fall over the next two years, house prices are expected to return to consistent year-on-year growth,” Savills says.
A similar interest rate forecast from JLL was for a 20% rise in house prices over the next five years.
