What does the BoE’s emergency interest rate cut mean for the property market?

This morning the Bank of England announced it would be cutting interest rates to their lowest level in history.

From 0.75% to 0.25%, this move is an attempt to alleviate the economic hardship caused by the repercussions of the COVID-19 outbreak in the UK.

It follows similar unprecedented moves by the US Federal Reserve and Bank of Canada to combat the expected economic disruption from the virus.

So what does this mean for those involved in the UK property market?

High street banks use the Bank of England base rate of interest as a reference point for many of their own mortgages and savings account.

Thus, we can expect to see those with non-fixed rate mortgages receiving better rates and having to make lesser payments month-to-month. Only a minority will have their rates change immediately, whilst others will wait to see how their mortgage provider reacts to the news.

More generally, this move is also designed to assist with the increased demand for short-term credit from households and working capital from companies – both a result of COVID-19 ripple effects.

For those saving with the hopes of purchasing a property, little will change. Although this undeniably represents bad news for their savings – it represents a temporary measure at a time where low returns on such investments have been the norm regardless.

If you want to find out what the Bank of England’s announcement means for MFS’ bridging loan rates, be sure to get in touch with a member of the team by emailing: [email protected]