The Bank of England’s first interest rate cut in four years has inspired an upswing in homebuyer activity, with major lenders like Barclays, Halifax, HSBC and NatWest now offering five-year fixed-rate mortgages under 4%, below the Bank’s 5% key rate.
NatWest is now offering a five-year rate at just 3.71%, with a 40% deposit and a higher product fee, along with a 3.77% loan with a standard fee on energy-efficient properties.
The last time cheaper loans were available was in early September 2022, shortly before the
then Conservative prime minister’s disastrous “mini” budget. Comparatively, this time last year the average five-year fixed-rate mortgage was 5.82%.
The market is enjoying an uptick in buyer activity and opportunity
The improving economic environment in the UK along with increased political stability from the July general election outcome has led to the number of house hunters contacting estate agents for viewings increasing by 19% versus a year ago, according to data from property platform Rightmove. The number of new sellers coming to market also rose 5% this month compared with the previous year, while the number of sales being agreed is 16% ahead of the near-peak mortgage rate period of a year ago.
The Bank of England might introduce further cuts
The interest rate cuts from 5.25% to 5% on August first were the first since the start of the Covid pandemic, easing pressure on households after the Bank had raised borrowing costs to the highest level since the 2008 financial crisis to tackle soaring inflation.
Figures recently showed that inflation rose to 2.2% in July, above the Bank’s 2% target but
significantly lower than a peak of 11.1% two years ago after the Russian invasion of Ukraine
triggered a surge in energy prices.
The Bank is expected to meet on September 19th to make a new interest rate decision but is
expected to keep rates on hold at its next meeting before restarting reductions in November
where they might be lowered to around 4.75%. Financial analysts widely expect that the Bank will react to decreasing inflation by cutting rates further, possibly to as low as 3.5% by the end of next year.
An exciting opportunity for expats
With the UK property market offering favourable conditions for buyers, UK expat and foreign
national investors are benefiting from a range of competitive mortgage products from lenders, a slight dip in property prices paired with a weaker pound, and an increase of choice in properties coming onto the market.
Evidence of UK expat and foreign national investors’ optimism is clear from the number of
investors searching for UK properties, with the number of searches for UK property by overseas buyers growing month-on-month and now accounting for 11% of all activity in the first 6 months of 2024, compared to just 6.8% of activity from the same period three years ago.
These favourable conditions make now an ideal time for expats and foreign nationals to expand existing portfolios or dip their toes into the UK market for the first time.
Individual lenders will set their own mortgage rates and terms so it’s always highly
recommended to shop around for the deal best suited to your financial needs and investment
goals. Consulting with an industry professional is vital to ensure you move in the right direction for your personal financial and property goals, whether it be renting, buying or selling property in the UK market.
Contact Tailor My Property today and connect with our expert network of financial and property professionals who can assist and advise as you explore and navigate these exciting mortgage and property opportunities.
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