The news for which would-be homeowners, or those looking to make a move, were hoping finally arrived last week, when the Bank of England (BoE) cut the base rate to 5 per cent. A dark cloud has hung over the property market ever since Liz Truss and Kwasi Kwarteng’s ill-fated afternoon at the dispatch box, with rising mortgage rates and crippling inflation hitting affordability and sending price growth into reverse. But real wages are now rising, the economy is improving and falling base rates should lower borrowing costs. Is this all enough to kickstart the property market?
Some evidence has appeared already. Mortgages are priced off swap rates, rather than the base rate, and the former have already been pricing in a cut by the central bank. Figures from Moneyfacts, a data provider, show the average rate on a two-year fix had dropped to 5.77 per cent at the start of August, down from 5.95 per cent a month earlier. In the same period, Nationwide data showed house prices rose 0.3 per cent, the third month in a row, and above the 0.1 per cent rise that had been expected, albeit transaction volumes were fairly similar month on month.