Interest Rate Cut on the Horizon: What It Means for Buyers and Sellers
The Bank of England is under growing pressure to lower interest rates next month as weak economic growth and declining inflation continue to shape the financial landscape. This move is widely anticipated to be the first of several rate cuts in 2025, with traders predicting the base rate could drop to as low as 4% by year-end.
What’s Driving the Change?
Recent data from the Office for National Statistics revealed that the UK’s economic output grew by just 0.1% in November, below the forecasted 0.2%. While services and construction sectors showed some resilience, manufacturing saw its third consecutive monthly decline. Inflation, as measured by the consumer price index (CPI), also softened, falling from 2.6% in November to 2.5% in December. These factors have reignited calls for a reduction in the base rate, currently at 4.75%.
Luke Bartholomew, deputy chief economist at Abrdn, noted, “With inflation coming in softer yesterday, the ongoing weakness in growth will further tip the Bank of England towards easing again at its next meeting in February.”
What Does This Mean for Sellers?
For property sellers, a lower interest rate environment typically leads to increased buyer activity. With borrowing costs reduced, more potential buyers may qualify for mortgages or feel confident making offers. This could help drive up demand for properties and potentially lead to quicker sales at competitive prices. If you’ve been considering selling, now may be an excellent time to list your property to capitalise on increased market activity.
How Buyers Could Benefit
Buyers are poised to benefit significantly from a drop in interest rates. Lower borrowing costs mean smaller monthly mortgage repayments, making homeownership more affordable. Additionally, with expectations of further rate cuts throughout the year, prospective buyers may find themselves in a more favorable financial position to secure their dream property.
What’s the Outlook for 2025?
While the economic outlook remains uncertain, early indicators point to potential growth later in the year. Government spending and investment are expected to boost the economy, and early signs of revived consumer spending offer a glimmer of optimism. However, the slow start to the year underlines the importance of strategic timing for buyers and sellers alike.
How Mannleys Can Help
At Mannleys Sales & Lettings, we’re here to guide you through these changing market conditions. Whether you’re looking to buy, sell, or let, our team is ready to provide expert advice tailored to your needs. Contact us today to discuss how you can make the most of the opportunities in 2025’s property market.
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