The UK property market is on an upswing. With inflation under the control of the Bank of England, having reached target of 2.0% only a few months ago, interest rates once increased to tame inflation were due to come down, and come down they did. The Bank’s Monetary Policy Committee (MPC) voted by majority to cut the standard base interest rate by 0.25% to 5.0%. It was the first time the committee had voted to cut the rate since March 2020. However, lenders began cutting their rates before the decision by the MPC.

In the start of the year, when the MPC was expected to cut the base rate in spring, lenders began cutting their mortgage and remortgage rates, but when data revealed the rate would not likely reduce, lenders reversed their cuts. Quickly the best and lowest interest rates disappeared.

The inflation data again signaled a likely drop to the target rate of 2.0% set by the Bank, and lenders were optimistic and lowered their rates prior to the decision by the MPC. Inflation reached 2.0%, held for another month and then rose slightly. This was all anticipated by the committee and on 1 August they voted for the first cut in a long while offering optimism to borrowers and signaling an opportunity to borrow at a cheaper and more affordable rate.

Waiting for the decision of the MPC was not required, as lenders dropped some deals at or below the expected outcome of the first decline in the base rate. Now, after the cut, lenders have cut even further and under 4.0% deals are available.

Not only are better interest rates available, but the deals are widened to include more borrowers. Weeks ago, the best rates were only available to those with large deposits or for homeowners seeking a remortgage that had built up high levels of equity in their home. Lenders are loosening their qualifiers and now those with lower deposits and less equity could have access to the best interest rate deals.

Due to the favorable interest rates available, home buyers are returning to the market and sellers are taking advantage of the inflow of demand and are putting competitively priced properties onto the market. Buyers are benefiting from lower borrowing costs, cheaper asking prices, and a higher supply of properties available.

These factors are indicative of growth in the housing market, at least if sellers continue pricing competitively, which they should do as it was released in a study recently home sellers overpricing their property spend two plus months more on the market even if they offer a reduction later on with their pricing.

The recent data from the Nationwide House Price Index revealed the average house price is at £265,375.

Robert Gardner, chief economist for Nationwide, remarked, “While house price growth and activity remain subdued by historic standards, they nevertheless present a picture of resilience in the context of the higher interest rate environment and where house prices remain high relative to average earnings. which makes raising a deposit more challenging.

“Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth.”