The Bank of England Monetary Policy Committee’s decision to cut interest rates is good news for property buyers and sellers in East Central Scotland, say local solicitors and estate agents.
The Bank of England’s Monetary Policy Committee voted unanimously on 4 August 2016, to cut the Bank Rate (commonly referred to as ‘’The Bank of England Base Rate’) from its already historic low of 0.5% to 0.25%.
The announcement comes on the back of the Bank of England cutting its 2017 economic growth forecasts from 2.3% to 0.8%. The Bank of England also announced that it will boost its quantitative easing programme by £60 billion, which means the Bank of England will be buying bonds from UK banks, with newly created money, in an attempt to stimulate the economy.
Robert Carroll, Managing Director of MOV8 Real Estate, a leading firm of estate agents and solicitors based in Edinburgh, believes that this is good news for property buyers and sellers in Scotland.
“Whilst the property market in East Central Scotland has escaped from the EU referendum result relatively unscathed, the Bank of England’s announcement is a welcome one. It’s encouraging that the Bank of England is taking positive steps to address the economic effect of any uncertainty that the EU referendum result might have caused. The property market isn’t an island and anything that has a positive effect on the overall economy can only help to bolster confidence in the property market.”
Carroll views today’s announcement is a positive stimulus package for the property market in East Central Scotland saying, “As long as rates remain at these historically low levels, property buyers and sellers should continue to benefit from more affordable mortgage products. Mortgage availability remains strong so anyone who is thinking of buying or selling a property in East Central Scotland can only be encouraged by today’s announcement.”
Robin Purdie, Director of MOV8 Financial, Independent Mortgage Advisers, also believes that today’s announcement will benefit some existing home owners, but points out that many people who have recently bought a property will not see the cut reflected in their mortgage payments.
“Today’s rate cut is good news for those already on tracker mortgages as their rate will reduce, but the vast majority of current mortgages are on fixed rates as most homeowners prefer the security of knowing how much their payments are going to be.”
When looking at how new mortgage applicants will be affected by the cut, Purdie believes that lenders have been prepared for today’s cut and that mortgage product rates will remain historically low, stating, “In terms of new borrowing, I’d imagine that the products that are available from lenders just now have already factored in a rate reduction. Some lenders have increased interest rates on their tracker products in recent weeks in anticipation of the cut and fixed rates remain pretty steady at their current record lows.”