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BREAKING NEWS: Interest rates cut to 0.25%

August 4, 2016Article by Chelsea Battle

BREAKING NEWS: Bank of England cuts interest rates, what does it mean for UK property?

CEO Ray Withers comments:

“The news that interest rate cuts have been introduced by the Bank of England today is good news for the property sector. The already record low rate of 0.5% has been halved to 0.25%, which is good news for anyone funding their property ownership through a variable rate mortgage.

“Lower interest rates are also good news for the UK’s construction industry, as lower borrowing costs can spur developers on to build more. This in turn creates more opportunities for off plan property investment, so lower interest rates benefit investors too.

“The UK continues to have a severe housing shortfall, meaning demand for new homes is set to remain strong for years. Strong demand and an interest rate cut are a great combination for buy-to-let property investors. While interest rates have gone down, yields have remained the same, meaning that the buy-to-let profit margin has effectively gone up overnight. Even overseas investors can benefit if they borrow in sterling to fund their UK property purchase.

“Those looking to take out fixed rate mortgages could also benefit from the interest rate cut, as new fixed rate borrowing is likely to be at more competitive rates as a result of the interest rate cut.

“The other aspect of the rate cut to consider is that investing in UK property is now more attractive when compared with other asset classes. Bonds and savings, for example, could both become less appealing as a result of lower interest rates, so it wouldn’t be surprising to see investors looking to release cash from those asset classes in order to use it for more profitable ventures, like buy-to-let property.”

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