The UK’s housing market saw a significant increase in activity following the Bank of England’s recent decision to cut interest rates, according to a report by property website Rightmove. Estate agents reported a 19% rise in property enquiries after August 1, compared to the same period last year.
The Bank of England reduced rates from 5.25% to 5% in early August, marking the first cut in over four years. Tim Bannister of Rightmove noted that the rate cut has “sparked a welcome late summer boost in buyer activity.” Although mortgage rates haven’t dropped substantially, the first rate cut has improved home-mover sentiment.
Despite a slow year due to high rates, August’s figures were promising, building on an 11% increase in enquiries seen in July. Rightmove’s data also revealed that the average interest rate on a five-year fixed mortgage has decreased to 4.8%, down from 5.82% a year ago.
Average asking prices fell by 1.5% between July 7 and August 10, a typical seasonal decline attributed to summer holidays. However, prices remain 0.8% higher than a year earlier, up from a 0.4% increase in the previous month.
Propertymark CEO Nathan Emerson emphasized the need for further confidence in the housing market, suggesting that additional rate cuts could bolster activity if inflation continues to decline. Rightmove has revised its 2024 house price forecast, now predicting a 1% increase due to positive market trends, reversing an earlier expectation of a 1% drop.
Financial markets estimate a 31% chance of another rate cut in September, with an 82% likelihood of a cut in November, following a slight uptick in inflation to 2.2% in July.
