Bank of England rate cut sparks ‘welcome boost’ in homebuyer activity

The first Bank of England rate cut for four years has led to an immediate upturn in buyer activity, according to Rightmove.

Estate agents have seen a 19% jump in the number of people contacting them about homes for sale since August 1, compared with the same period last year.

While the housing market was unusually slow in 2023 because of high interest rates and the cost-of-living crisis, the figure also represents a jump from the 11% year-on-year uplift seen in July.

The Bank’s Monetary Policy Committee voted to reduce the base interest rate to 5% at the start of the month, a quarter point cut.

Rightmove said the average new-seller asking price across the UK had fallen 1.5% in August to £367,785, a £5,708 monthly drop.

But the property website said the drop was seasonal, and had happened for the last 18 years, as sellers put home-moving plans on hold in August to go on holiday.

The property website has revised its yearly house price forecast up to a 1% rise, from a previous estimate of a 1% drop over the whole of 2024.

Tim Bannister, Rightmove’s director of property science, said the rate cut “sparked a welcome late summer boost in buyer activity”.

“While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment,” he said.

“As the summer holiday season comes to an end, the conditions are there for a more active autumn market.”

The average five-year, fixed mortgage rate is now 4.80%, Rightmove said, still higher than three years ago – before the first of 14 consecutive Bank rate increases – but significantly down from 5.82% at this point in 2023.

Rightmove’s weekly mortgage tracker shows that the best available five-year fixed rate is now 3.83% for those with a 40% deposit, Rightmove added.

The figure is the lowest that a five-year fixed rate has been since the period before then-prime minister Liz Truss’s mini-budget in September 2022.