The Bank of England cuts base rate to 0.25%

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4 Aug 2016

The Bank of England cuts base rate to 0.25%

Author: Antony Gibson

All eyes were on the Bank of England today, and it’s now official, the base rate has dropped to 0.25%.

The base rate has already been at a historically-low level of 0.5% for the past seven years due to the financial crises, so this further cut is truly a record-breaking low.

Why has the base rate been cut?

The additional cut has been encouraged by some to cushion the effects of June’s UK vote to leave the EU. This has also led to a mortgage price war and the introduction of some very competitive longer-term deals.

What does this mean for buyers?

“The rate cut provides buyers, home movers, and investors with reassurance around affordability and therefore renewed confidence in the housing market” comments Antony Gibson, Sales Director at Romans.

The Bank of England also relaxed its capital requirements on the banking sector in July to maintain a steady flow of credit to households and firms, a move which is expected to release up to £150 billion in additional loans to the private sector.

Romans predicts that buyers will now be quick to recognise the renewed value and affordability of property, and the ability to secure fixed-rate mortgages at historically low rates will enable them to forecast their future costs.

“All buyers want certainty over affordability and this rate cut provides that” adds Antony. “The demand for property is not declining, and for many of our customers the reasons they’re moving have not changed, and now they will find their mortgage more affordable. First time buyers especially will make the most of the greater affordability.”

What does the cut mean for investors?

Antony says: “UK buy-to-let investors will look to secure long-term investments for their capital while utilising the low cost borrowing and overseas investors are looking to the UK property market as the softening of the pound in recent weeks has made property much more affordable.”

Romans believes demand will continue to drive the UK property market and there is no evidence to suggest that supply will increase by enough to change the balance.

With close to 30 years’ experience in the local property market, Romans is best placed to offer you expert advice before you make your next move. Contact the team at your local branch to find out more on 01344 985 666.

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