The Bank of England has lowered its base interest rate to 4.75% to help boost the slowing economy. This is the first rate cut in two years, following a series of sharp increases aimed at controlling inflation. With inflation starting to stabilise, the bank is now shifting its focus to supporting economic growth. The decision comes as signs of weaker consumer spending and investment suggest that a more cautious approach to rates could help the economy recover without pushing inflation back up.
The rate cut may offer some relief to mortgage holders, especially in London where property prices are much higher than the national average. People with variable-rate mortgages or fixed-rate mortgages nearing renewal could see their monthly payments decrease slightly, easing financial pressure. For new buyers, lower interest rates might make mortgages slightly cheaper, which could make it easier to buy a home or remortgage. However, experts warn that the savings may be small because lenders often pass on rate cuts cautiously, especially during uncertain economic times.
London’s housing market is sensitive to changes in interest rates. Lower rates could encourage more buyers to enter the market, especially those who held off due to high mortgage costs. This could increase demand for homes. However, the limited supply of housing in London might prevent sales from rising significantly, which could instead push prices up. London’s property prices have been stagnant recently due to economic uncertainty and previous interest rate hikes. While this rate cut might help stabilise prices and attract more buyers, a single cut may not be enough to drive a long-term price increase. Sustained low interest rates over a longer period would likely be needed for lasting growth in property values.
