When the Bank of England adjusts its base rate, it has a ripple effect across the housing market, directly influencing residential conveyancing transactions. Home Property Law’s Cordelia Grassby looks at how the Bank of England’s base rate will affect those looking to purchase a property.
The base rate is the interest rate the Bank of England charges other banks for borrowing money. When it rises, lenders typically increase mortgage rates, making borrowing more expensive for homebuyers.
For those purchasing a property, higher mortgage rates mean higher monthly repayments, potentially reducing the affordability of a desired home. This can cause some buyers to reconsider their budget or delay their purchase until rates stabilize. Conversely, when the base rate is lowered, mortgage rates may decrease, making home loans more affordable and potentially boosting property demand.
In addition to affecting borrowing costs, the base rate can also impact property prices. Higher interest rates can cool the market, leading to slower price growth or even price drops as demand softens. On the other hand, lower rates may drive up demand, increasing competition and pushing prices higher.
Following the recent base rate reduction it is anticipated the property market will see a boost going into the summer following a 4% fall in buyer demand in April. Realtime data from Rightmove already shows increased activity in the first part of May.
For anyone navigating the conveyancing process, it’s essential to monitor base rate changes and consult with mortgage advisors to secure the best possible deal. Whether rates rise or fall, understanding their impact can help buyers make more informed financial decisions. If you are considering a property purchase please do reach out to the team at Home Property Law. Not only can we expertly guide you through the process we can also introduce you to our network of excellent mortgage advisors.
