The Bank of England base rate cut to 4.5% is a big step in the right direction for more affordable mortgages

The Bank of England base rate cut to 4.5%, last week is a big step in the right direction for more affordable mortgages says Enzo Mora CEO and founder of The Mortgage Brain

The first base rate cut of the year last week will mean a more positive outlook for borrowing in the coming months and this is great news for anyone looking to buy their first home or move up the ladder. We hope that this cut is the first of many! It comes on the back of lender Nationwide’s latest research showing that there was a modest improvement in UK housing affordability last year due to higher wages marginally outpacing house price growth and a slight reduction in borrowing costs. Again more good news.

Optimistic first time buyers

Despite the many challenges still facing aspiring homeowners, those who are planning to buy their first home this year are also more positive about the housing market than other UK adults, with a third of first-time buyers thinking now is a good time to buy a home, double the number a year ago. The January Property Tracker Report from the Building Societies Association (BSA) also revealed that 54% of aspiring homeowners think house prices will continue to rise in 2025. Interestingly, just 6% of existing borrowers are concerned about maintaining their mortgage payments for the next six months, down from 12% at the end of 2023, and the lowest proportion since June 2022. It’s a great feeling when our advisers can give our customers the good news that we have been able to secure a more affordable deal than their current mortgage. It is always worth using a broker to run the figures as we have exclusive deals with lenders that you can’t find yourself.

Mortgage innovation

Strict stress testing from lenders has rightly been in place since the financial crisis 17 years ago to make sure that borrowers can repay mortgages if interest rates rise during the term of the mortgage. This is now being questioned by the Financial Conduct Authority (FCA) in its mortgage lending review due to the low numbers of borrowers defaulting on payments and repossessions taking place. The BSA is hoping that the relative costs and benefits of stricter regulation versus the social benefits of homeownership, should help deliver greater mortgage innovation to meet the needs of prospective homebuyers, something that I for one would welcome. For example, allowing part repayment, part interest only lending, and the flexibility to shift between them, could improve affordability for many and could be the difference between be able to get on the property ladder or not.

Best time to buy and sell

February and March are the best months to list a home for sale, based on the likelihood the home goes on to successfully complete, closely followed by April and January, according to Rightmove. Nearly seven in 10 homes (66.3%) listed for sale in February and March since 2012 go on to complete the sale, the joint-highest months of the year. In an encouraging start to the year for buyer activity, buyer demand is up by 8% compared with the same period last year, and the number of sales being agreed is up by 15%. Before you start searching for a home, contact The Mortgage Brain to see how much you can borrow so you’ll be looking in the right price bracket. Following the bank rate cut, we have all the latest deals from lenders so we say now is the best time to get your mortgage application underway and plan your move.