Bank of England cuts interest rates for the second time this year

The Bank of England has cut interest rates for the second time this year so now is a great time to plan a move says Enzo Mora CEO and founder of The Mortgage Brain.

The Bank Base rate has dropped a quarter of a percent to 4.25% and already this has sent a wave of confidence across the mortgage market as interest rates fall and there is talk of more cuts on the horizon. This is welcome news for first-time buyers who need every extra penny they can get and also existing mortgagors many of whom are nearing the end of a fixed rate deal. Most lenders are now offering sub 4% rates and by using a broker like The Mortgage Brain, it’s the best way to find out about the most competitive deals. Our advisers are kept up to date literally minute by minute on the latest rates and you can do a quick mortgage check yourself via our online Mortgage Finder. We’ve made your search for a mortgage as easy as possible.

Property prices stable

Halifax’s latest House price index points to the recent stamp duty changes prompting a surge in transactions in the early part of this year but it didn’t lead to a significant increase in house prices, with the last six months showing stability rarely seen since the pandemic. This is more good news for buyers worried about being able to keep up with rising prices as savings towards house purchase previously being eroded quickly. The lender also notes that while the market has cooled slightly since this rush, buyer activity remains strong compared to recent years.

Boom baby boom

Meanwhile owner-occupiers aged 60-plus now hold a record estimated £2.89 trillion of net housing wealth in homes worth a total of £2.95 trillion, according to the latest assessment of housing wealth from property firm Savills. These amazingly large figures show owners have increased their share of property value in the last decade due to above-average growth in the number of older homeowners joining the ranks of the mortgage-free. In total, owner occupiers over 60 control more than half (56%) of all owner-occupier housing wealth across the UK, while those over 75 control almost a quarter (23%). In comparison, under 35s hold just 6%. However, the over-60s are not completely debt-free. They have a total of £60 billion mortgage borrowing still outstanding, but this is just 2% of the total value of their homes. In stark contrast, the Savills research found that under-35s hold property with a total value of £600 billion but have a total of £300 billion mortgage borrowing still outstanding. Over that last 10 years, the baby boomers have continued to build wealth, having paid off their mortgage debt, and Generation X has been working hard to achieve the same goal. Meanwhile, Generations Y and Z have had much less opportunity to work their way up the housing ladder profitably.

Stress tests made less stressful

While buyers focus on the mortgage rate they will pay, lenders also check whether the borrower can afford a ‘stressed mortgage rate’ at a higher level than the borrower will pay. Zoopla has highlighted proposed changes to the current ‘stress testing’ affordability at 8-9% and a return to pre-2022 levels of 6.5% to 7%, as positively supporting market activity in the coming months and delivering a 15-20% boost to buying power. Our advisers are trained to make sure you explore all avenues of making your income count so please get in touch to see how we can secure you your next stressless mortgage!