The Bank of England reducing interest rates by .25% has been welcomed as "positive news" for buyers and homeowners in Northern Ireland with local mortgage advisors saying that now is a good time to enter the housing market.
The Bank’s Monetary Policy Committee (MPC) announced that rates were being reduced from 5% to 4.75% on Thursday. It is the second time this year that UK interest rates have been cut as the Bank of England forecast a “gradual” reduction in borrowing costs despite uncertainty following the autumn Budget.
Governor Andrew Bailey said UK inflation falling below its 2% target meant policymakers had been able to cut rates to the lowest level since June last year.
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“We need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much,” he said.
“But if the economy evolves as we expect, it’s likely that interest rates will continue to fall gradually from here.”
The decision is set to relieve some pressure on borrowers who have faced elevated mortgage and loan costs since rates started rising three years ago.
Tanya Martin, Financial Planner and Managing Director at Mortgage IQ, said that the interest rate cut is positive news that will help further stimulate activity in the housing market and that now could be a good time for buyers to act as future cuts could be less frequent.
She said: "Earlier this afternoon, the Bank of England cut the base rate by 0.25 percentage points, bringing it down from 5% to 4.75%. This is the second rate cut we’ve seen this year, and it’s a welcome move for the housing market. For Northern Ireland, based on what we saw after the previous rate cut, this is really positive news and will help to stimulate more activity, with potential for more people to move, buy, or remortgage and boost an already burgeoning market.
"For those on Bank of England tracker rates, the change will be felt right away. If you have a tracker mortgage, you’ll likely see your monthly repayments drop by around £15 for every £100,000 of your loan. Even those on variable or discount rates might see their payments come down, though the reduction may vary depending on the lender.
"If you’re on your lender’s Standard Variable Rate (SVR), there's a good chance your rate will be adjusted as well. Lenders typically follow base rate changes with their own SVR adjustments, although the exact timing can vary.
"For homeowners currently on fixed rates, there’s no immediate change to your monthly payments until your fixed term comes to an end. That said, many lenders have already started to reduce their new fixed-rate deals ahead of today’s announcement, so in the coming days, we could see even more attractive fixed rates available.
"While today’s rate cut is a boost, it’s worth noting that there’s some uncertainty around the pace of future cuts, especially with inflation expected to rise in the coming months. As a result, we don’t anticipate rates coming down as quickly in 2025 as previously expected, and it now looks like the base rate might settle around 3.5% by early 2026.
"For anyone thinking about buying, moving, or remortgaging, it’s a good time to act. With rate cuts expected to be more gradual in the coming years, you might want to take advantage of current opportunities now rather than waiting too long for further cuts. All in all, this is a really positive development, and it’s certainly a good moment for homeowners and potential buyers in Northern Ireland to consider their next steps."
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