Key Highlights

Earlier this month, The Bank of England (BoE) decided to further slash interest rates by 0.25%. The rates are now at 4.5% from 4.75% – their lowest point since June 2023. Additionally, in the face of ongoing economic challenges, the markets are expecting to witness further cuts this year. 

Rationale Behind the Decision

The Bank of England’s Monetary Policy Committee (MPC) seeks to balance controlling inflation while promoting economic stability and facilitating growth. This latest rate cut aims to reduce borrowing costs for households and businesses, potentially encouraging spending and investment.

Expert Insights

Financial experts have provided their perspectives on the potential effects of the rate cut:

• Positive Market Stimulus: Some analysts emphasise that this cut could further help ease the cost of living pressures for families, increasing consumer spending, helping businesses to borrow and grow, and offering a much-needed boost to sectors like real estate and construction.
• Potential Risks: On the other hand, some others fear that the UK could continue to face further inflation and slower growth, stressing that a bolder cut of 0.5% would have presented a better economic outlook.

Impact on Borrowers and Savers

For mortgage holders with variable or tracker loans, or those seeking new fixed-rate mortgages, the adjustments can lead to significantly lower monthly repayments. With reduced rates, many homeowners may find their financial burdens eased, unlocking additional disposable income for other investments or spending. However, savers may continue to encounter difficulties in securing attractive returns on their deposits, as banks often adjust savings rates in alignment with changes to the base rate.

Implications for Property Investors

The property market stands to gain considerably from this rate change. Recent data from UK Finance suggests that a decline in interest rates could result in a monthly repayment reduction of around £29 for mortgage holders. Should lenders align their rates with the base cut, borrowers might even see savings of approximately £17 per month. This creates a highly attractive landscape for property investment, as lower borrowing costs enhance affordability and encourage more buyers to enter the market. Thus, off-plan property investments may benefit, as lower financing costs improve buyer affordability and investor interest. Given that construction timelines allow investors to take advantage of current market conditions while preparing for future growth, the allure of purchasing off-plan properties becomes particularly compelling. Developers may also see heightened interest in their projects, further energising the sector’s momentum.

Economic Outlook

The BoE’s forecast indicates slowed economic growth, having had to revise its previous growth forecast to a lower percentage. However, the recent interest rate cut is poised to reduce cost-of-living pressures for families and create a more favorable borrowing environment for businesses, making it an ideal time for investment. While the immediate future may see slower growth, forecasts for 2026 and 2027 predict an encouraging 1.5% growth rate, an increase from previous projections. With market expectations leaning towards three more rate cuts this year, the property sector stands to benefit greatly, making it an opportune time for investors to seize advantageous opportunities.

At North Property Group, we recognise how these economic fluctuations can affect property investments. Our team is dedicated to assisting investors in navigating these changes with customised advice and prime opportunities. Whether you’re aiming to expand your portfolio or explore new property ventures, contact us today to make informed, strategic decisions in a dynamic market.

About Us 

North Property Group is a premium property investment agency and lettings agency focusing on premium UK real estate. We are a team of experts dedicated to finding you the best opportunities and guiding you through the investment lifecycle. We have in-depth knowledge of the property market and policy changes within the industry, so we can help guide and advise as the UK government unveils its new budget.

Book a free consultation with us today to start your journey of investing in off-plan UK property.