How homebuyers could benefit from the recent interest rate cut
06 February 2025
The Bank of England interest rate has been cut from 4.75% to 4.5%, the lowest in 18 months. So how will this affect anyone thinking of buying a new home?
The latest news that the Bank of England interest rate has been cut 0.25% to 4.5% was widely predicted, and is the third time the rate has been cut in the past 12 months.
How will this affect mortgages?
The update is promising news for first-time buyers and anyone else thinking of buying a new home, as mortgage rates are likely to follow suit.
Several lenders had pre-emptively reduced rates across some of their deals. These include Halifax, which has cut their homemover and first-time buyer products by up to 0.11%, while Nationwide and HSBC are also among those to reduce rates on certain deals.
It’s also good news for many homeowners who are currently paying a mortgage. The BBC has reported that homeowners with mortgages that track the base rate will see an average drop in payments of £29, according to banking trade body UK Finance.
Those on standard variable rate mortgages are likely to see their payments fall too, if lenders match the lower base rate. And, while fixed-rate mortgages won't change, those with deals that end soon might be able to find a new deal with a lower rate.
However, buyers will have to be selective about which option they choose. Some mortgage deals have seen rate increases, as lenders consider future changes to the interest rate.
Is now a good time to buy?
The answer is yes, if you are able to access a mortgage product with a more favourable rate. There’s the added incentive of acting quickly to save thousands on Stamp Duty, due to threshold changes that will come into effect on 1st April.
Buyers in the UK and Northern Ireland will have to complete by 31st March to take advantage of the current rates. After this, both first time buyers and existing homeowners might have to pay more to move. You can find out more about Stamp Duty here.
If you're considering buying a new Charles Church home, you could also make the most of our Bespoke Offers. We're offering a range of incentives that can be tailored to you, from contributions towards finishes, to support with making your deposit and Part Exchange more affordable. Flexible solutions to help you buy your home, your way.