Britons buy cheaper mortgages as BOE cuts boost market

LONDON — Britain’s biggest lenders are continuing to cut borrowing costs after the Bank of England’s first move interest rate cut Four years have created a boom in home buying.

Barclays BankHalifax, HSBC Bank And Northwest is among lenders now offering five-year fixed-rate mortgages below 4%, below the BOE’s key rate of 5%.

According to one study, the best five-year fixed rate right now is 3.83% for buyers with a 40% down payment. new report from property portal Rightmove. This is the lowest for such a product since before the UK’s disaster small budget in September 2022.

It follows a previous one. loosen tracking ratioin line with the Bank’s 25 basis point rate cut earlier this month.

Rightmove found that the improving economic climate, as well as the political certainty gained following the UK’s general election in July, had led to an “immediate increase” in buyer activity.

The portal said in its report that the number of home seekers contacting estate agents to view properties rose 19% compared to a year ago following the BOE’s August 1 decision, adding that this was a significant increase compared to the 11% annual increase recorded in July.

The number of new sellers entering the market also rose 5% this month compared to a year ago, while the number of transactions closed was 16% higher than when mortgage rates were near their peak a year ago.

Tim Bannister, director of property science at Rightmove, said that while the rate cut was small, it had brought some relief to struggling homebuyers, and he expected activity to pick up further in the autumn.

“While mortgage rates have not fallen significantly since the rate cut, the fact that the long-awaited first cut has finally happened and mortgage rates are trending lower is a positive sign for homebuyer sentiment,” he said in the report.

Rightmove now expects new seller asking prices to rise slightly by 1% by 2024, up from its previous prediction of a 1% fall.

The BOE meets on September 19 to make its next interest rate decision. Markets are currently pricing in a 37% chance of a rate cut in September, with expectations rising to 74% in November, according to LSEG data.

Peter Gettins, product director at L&C Mortgages, said many buyers would be watching the outcome of the meeting closely for signs of the future path of mortgage rates.

“Many may be inclined to wait and see if rates come down further. If we get another rate cut in the next few months, we would expect confidence to be further bolstered,” he told CNBC via email.