Leaders from the UK property, property finance and real estate investment sectors share their responses to the Bank of England decision to reduce base rates for the first time in over four year with FM Magazine.
Nathan Emerson, CEO of Propertymark, comments: “Today’s rate cut it is excellent news for the housing market and no doubt a huge sigh of relief for those who have felt the pain of higher interest rates for the last two years.
Summer is traditionally a busy time of the year for the housing market, and today’s base rate cut should hopefully provide a new wave of confidence and affordability for many.
Paresh Raja, CEO of Market Financial Solutions, says: "The base rate has finally been cut, easing the barriers that have constrained the UK property market amid two years of high inflation and borrowing costs. I expect to see increased market activity in the coming weeks as a result.
"In recent months, we've seen a growing sense of optimism. With property prices and the volume of homes coming onto the market on the rise, today's decision will likely encourage investors who have been holding back to re-engage. Despite the rate cut, however, borrowing costs remain extremely high, so flexibility for borrowers and brokers remains essential.
"Therefore, any potential rebound in the UK property market will hinge on the specialist lending sector. A recent survey shows that a substantial majority of bridging lenders expect loan volumes to rise over the next year. Given the uncertainty about future rate cuts, lenders should be offering a range of product options to accommodate brokers' and borrowers' needs and interest rate expectations. This will help them take full advantage of the opportunities created by the rate cut, even if further rate changes do not occur immediately."
David Hannah, Group Chairman of Cornerstone Tax, says: “Today’s news from the Bank of England marks a positive step in the right direction.
The monetary policy committee has recognised that a relentlessly hawkish approach has its harsh limits.
Duncan Kreeger, CEO and founder of TAB, a real estate finance and investment platform backed by NatWest makes the following comment: "Today's interest rate announcement is extremely welcome and comes at a time of increasing market confidence. Lowering interest rates will help unlock capital, drive investment, and contribute to an improving economy.
Additionally, a record number of landlords have exited the private rental sector, contributing to higher prices for tenants who once aspired to take their first step on the property ladder.
“I’d urge the MPC to continue this momentum by considering another interest rate cut in their next meeting, even a reduction by a quarter percentage point would signal further optimism within the UK economy. A target base rate of 3-3.5% should be the overall goal if the BoE want to truly prioritise prospective buyers.”
Paresh Raja, CEO of Market Financial Solutions, says: “The base rate has finally been cut, easing the barriers that have constrained the UK property market amid two years of high inflation and borrowing costs.
I expect to see increased market activity in the coming weeks as a result.
“In recent months, we’ve seen a growing sense of optimism.
With property prices and the volume of homes coming onto the market on the rise, today’s decision will likely encourage investors who have been holding back to re-engage.
Despite the rate cut, however, borrowing costs remain extremely high, so flexibility for borrowers and brokers remains essential.
“Therefore, any potential rebound in the UK property market will hinge on the specialist lending sector. A recent survey shows that a substantial majority of bridging lenders expect loan volumes to rise over the next year.
Given the uncertainty about future rate cuts, lenders should be offering a range of product options to accommodate brokers’ and borrowers’ needs and interest rate expectations.
This will help them take full advantage of the opportunities created by the rate cut, even if further rate changes do not occur immediately.”
Jatin Ondhia, CEO of Shojin Property Partners, says: “The consecutive months of target level inflation were clearly enough for the Bank of England to finally give the green light to reduce interest rates.
The decision is a key indicator of the growing sense of economic stability and will likely open up new opportunities for investors as they reassess how to manage their portfolios.
“The impact of the high inflationary-high interest environment of the last couple of years cannot be underestimated.
Homeowners have faced higher mortgage rates than at any point since the financial crisis, while developers have found it harder to access much-needed finance.
Today’s decision hopefully signals a clear transition away from this challenging period.
“Looking ahead, alternative investments are likely to play an increasingly important role in investors’ portfolios.
While the base rate has now fallen, it’s from a 16-year high – interest rates still remain significantly above the levels that many landlords had become accustomed to before the hikes.
As such, diversification will remain a prominent trend going forward, with a balance of savings products and lower-risk investments alongside higher-risk opportunities to provide potential for greater growth.”
Ben Nichols, Interim Managing Director at RAW Capital Partners, says: “The Bank of England clearly feel as though the perils of high inflation have been addressed by their action on interest rates and the rate hiking cycle has finally come to an end, allowing homebuyers, investors and BTL landlords alike to take a breath and plan their strategies with greater confidence and freedom.
After rates reached their highest level in 16 years, today’s decision will provide much-needed relief, and I expect to see an uptick in activity in the UK property market as a result.
“Recently, sellers have flocked to put their properties on the market, and estate agents have noted an increase in buyer demand.
What’s more, official figures show that house prices have grown for three consecutive months, while mortgage approvals have held steady near their highest level in 18 months.
This indicates that the market was stabilising well before today’s rate cut.
In this context, the additional impetus from the MPC today is likely to encourage hesitant investors and buyers to resume their investment plans.
“However, while we can celebrate a rate cut after two years of hikes and pauses, it is important to remember that rates are still very high in comparison to where they have been in recent memory.
For a surge in activity to materialise, brokers and their clients must be equipped with the tools they need to confidently execute their investment plans.
Lenders must recommit to offering a wide range of bespoke and flexible financial products to support the property market’s continued recovery.”
Duncan Kreeger, CEO and founder of TAB, a real estate finance and investment platform backed by NatWest makes the following comment: “Today's interest rate announcement is extremely welcome and comes at a time of increasing market confidence.
Lowering interest rates will help unlock capital, drive investment, and contribute to an improving economy.
“Reduced political uncertainty combined with changes to the planning framework and today’s interest rate decision mean that the commercial property sector is well-positioned for a busy second half of 2024.
At TAB, we have seen increases in loan and mortgage enquiries over the last few weeks as well as more completions and we expect the Bank of England decision to be a catalyst for further activity.”
