UK Interest Rate Down to 4.75% – Why Investors Should Act Now

Yesterday, the Bank of England announced a cut in its base rate, dropping from 5% to 4.75%.

This change signals a new chapter for property investors. In this post, we’ll unpack what’s behind the rate drop, its impact on investing, and why now is a prime time to jump in.

Plus, we’ll cover the latest budget update that’s raised stamp duty on second homes—impacting many of investors.

Interest Rates and Inflation

Since early 2022, interest rates have been climbing as the Bank of England worked to contain post-COVID inflation.

With double-digit inflation driving the strategy, the Bank increased rates to cool the economy, aiming to ease inflation closer to its 2% target.

This recent cut is a promising sign that conditions may be shifting, creating a potential opportunity to secure financing at more favourable terms than we’ve seen in recent months.

Stamp Duty Increase

In the recent budget, Chancellor Rachel Reeves introduced a stamp duty increase on second homes, moving the rate up from 3% to 5%.

We saw a similar change back in 2016, where investors initially hesitated to buy but soon adjusted. This time, we anticipate a brief period where prices may dip as investors adjust, but with borrowing costs lowered by recent interest rate cuts, we expect the effect on demand to be minimal. For those prepared to act, this adjustment phase could present more opportunities to secure deals.

A Buyers’ Market with Motivated Sellers

Right now, the property market is in a buyers’ phase, meaning there are more people looking to sell than there are ready to buy.

Many landlords are leaving the market, especially those with properties in their own names who are impacted by changes like Section 24, which limits tax-deductible mortgage interest payments for all taxpayers.

For landlords with mortgages, the increase in interest rates has hit hard, in some cases doubling or even tripling monthly payments compared to what they were used to paying a few years ago. As costs rise, some properties are no longer profitable on paper, prompting landlords to sell.

For investors, this creates a unique opportunity. More sellers mean more negotiation power and potentially better deals. If you’re ready to close a deal before the end of the year, you’ll likely find motivated sellers who are keen to finalise their sales.

What’s Ahead in 2025?

Looking ahead to Spring 2025, we may see a resurgence in market activity. Spring often brings renewed interest in property transactions, and by then, people may be more accustomed to the recent stamp duty changes and hopeful for continued lower interest rates. If inflation remains under control, buyers and sellers alike could feel more confident re-entering the market. Until then, the current conditions offer a solid window for investors to act.

Why Now Is a Great Time to Invest

Despite the uncertainties, right now is a great time to invest in property. The current market offers access to motivated sellers and opportunities to negotiate better prices.

By focusing on helping sellers solve their immediate needs, you can position yourself to secure great deals. It’s true that interest rates might drop again, or inflation might spike, prompting the Bank of England to respond. But ultimately, if you’re prepared and understand how to find the right deals, there’s always an opportunity to make money in property.

Don’t wait around. If you’ve been on the fence about investing, this is the time to get out there, find those motivated sellers, and secure a good deal before the broader market catches up.

How Sourced Can Help

Sourced can help you navigate today's shifting property market, giving you access to the tools, resources, and support needed to find great deals and build a successful property business.

Download our prospectus here to find out more.