There could be another cut to the standard base interest rate by the Bank of England’s Monetary Policy Committee (MPC) in November according to economists. The reason for the optimism is not that inflation will drop to the target rate set by the Bank of 2.0% because it is expected to remain slightly above target into the early part of next year. The expectation of a rate cut is due to the slowing of wage growth. The forecast is for another majority vote of the MPC to cut the base rate by 0.25% next month, which will take the rate from 5.0% to 4.75%.

As UK house price indices continue to be released, the data confirms that the housing market is doing quite well. Home buyers are hopeful in the current supply of available properties and in the opportunity to obtain a low interest rate mortgage. In addition to more choices in possible homes and cheaper borrowing rates, asking prices, while still elevated from the buying frenzy of the pandemic, seem to be reasonable with buyers. They have increased, but not to the point of shutting out many buyers or having them disengage from the market all together. 

UK house prices increased for the third month in a row according to the latest report released by Halifax. Just short of the record high, the data for the month of September revealed confidence in the housing market and the economy as wage pay has increased and interest rates have declined. House prices increased by 0.3% last month to £293,399. This is only slightly below the peak high of £293,507 set in June 2022. September’s 0.3% increase mirrors the 0.3% increase of August. 

Mortgage and remortgage rates have been cut to incredibly attractive levels that would not have been expected with the Bank of England’s Monetary Policy Committee (MPC) having only cut the standard base rate one time so far this year. In the August MPC meeting, the committee voted to cut the rate by 0.25% to 5.0%. It was the first time the base rate had been cut since March 2020. It was a long time waited on since the expectation had been for the rate to be reduced in the start of the year, instead it took much longer. 

According to the recently released data from Zoopla, house prices were on the rise last month. The strong attention on the housing market from home buyers is credited to the recent cuts in lender mortgage rates. There is also more supply of properties available on the housing market and that has led to more competition between sellers for buyers. With lower interest rates, and therefore cheaper borrowing opportunities, and more homes to consider before buying, the housing market is much more attractive towards the end of the year than the beginning.

The UK housing market is in a period of growth. The reason the many house price indices are indicating strong demand is being credited to increased incomes and lower interest rates from lenders on mortgage offers. There has also been an increase of supply in available homes on the market, including starter homes for first-time buyers. Increased house prices reveal a healthy economy, but there is concern that house prices are already elevated from the buying boost caused by the pandemic when there were historically low interest rates. If house prices are on the rise, then what is ahead for home buyers and what will it mean for homeowners? We want a healthy and robust housing market, but rapid growth could be bad.