Bank Of England Base Rate Cut - What It Means For Property 🏘🏛💷

➡ It will most likely be business as usual in most markets following yesterday's base rate reduction, but there are a few things to take note of...

➡ Inflation has fallen to 1.7% for September 2024 as per the latest data from the ONS. This is below the government's 2% target, giving enough reason for the Bank Of England to cut the base rate 25 basis points to 4.75%. 

➡ The US has also cut their base rate this week in light of lower inflation 

➡ Despite the MPC voting to reduce the base rate, the speed at which future cuts will happen have been slowed down by Rachel Reeve's inflationary 2024 budget (which includes plans to spend billions). 

➡ If you were hoping for a big tumble down to the low rates we had in 2021, don't get your hopes up too soon. 

➡ As someone with a mortgage, you might be wondering how the recent base rate cut will impact your payments. Here's a quick breakdown:

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✅ Fixed-Rate Mortgage Holders:

- No immediate change for you, your rate remains the same until your fixed term ends. However, if your deal is wrapping up soon, start shopping around. Many lenders allow you to lock in a new rate 3-6 months ahead, 

✅ Approaching the End of Your Mortgage Deal?

- Now’s a good time to explore options. Waiting until your deal expires means rolling onto the SVR, which can hover around 7-8% (YUCK) much higher than fixed and tracker deals. Consider securing a new deal early to avoid an increase in monthly costs.

✅ Tracker Mortgage Holders:

- Good news, you’ll see a rate decrease. Your payments should drop within the next few weeks as your lender adjusts to the base rate cut.

✅ Already on Your Lender’s SVR?

- Your rate may come down, but SVRs are often much higher and can change unpredictably. Switching to a fixed or tracker deal now could yield significant savings.

Final Thoughts 💡

➡ With varied approaches among lenders, mortgage rates are highly dependent on a mix of base rate decisions, swap rates, and each lender’s strategy. 

➡ Don't get your hopes up, don't expect any major mortgage rate drops too soon

➡ It’s essential to speak to a mortgage broker who can provide a whole-of-market perspective to help you find the most suitable rate and product. Remember, the cheapest rate isn’t always the best fit—factors like flexibility, fees, and overall cost should be considered for a balanced mortgage decision.