Bank of England Interest Rate Cut

Miri Thomas talks to Insider's UK Property Editor Chantelle Dietz about today's decision by the Bank of England to cut interest rates to 5%.

Transcript

00:00Hi, I'm Mary Thomas. And I'm Chantelle Dietz.

00:08So today, Chantelle, the Bank of England has announced that the interest rates are getting

00:12cut from 5.25% to 5%. What's been the reaction?

00:17Well, it's been really positive, Mary. Obviously, we've got to bear in mind that the rates have

00:21been held quite high for a period of time. So, since August 2023, they've been held at

00:275.25%. So, it is a good confidence boost for the market.

00:33It's only a small decrease, though. I mean, is it going to make much of a difference?

00:37I think it will. Already, lenders have factored in this cut. So, we might not see a flurry

00:43of market activity with lenders cutting rates. NatWest and Virgin Money are two that have

00:50already cut rates in anticipation of this today. So, you know, it is a small amount,

00:56but it will be fairly significant and it's a step in the right direction.

01:00So, what we're talking about here is obviously mortgage rates and things like that for the

01:04average consumer. But bigger investors have also been telling me that because the cost

01:08of servicing debt has been so high, that some of them have been sitting on their hands rather

01:13than making commitments to those big deals, waiting for rate cuts. I mean, is it going

01:18to make a difference to them? I think it will make a difference to them

01:21as well. They've also been restricted by construction and material costs, which means that they've

01:26had to readjust their expectations on what profits they will make out of developments.

01:31So, yeah, I know it sounds small, but I think it will make a difference and hopefully we're

01:35on the right trajectory for things to improve further.

01:38So, what else can we expect after today's cut? Well, the Bank of England will meet again

01:43on the 19th of September. So, we may have another cut within a month's time, which would

01:48be great news. And also, on top of the planning reform, I think this is really positive and

01:54a huge confidence boost for the market.