This move should give buyers and sellers the confidence that the housing market will improve as we head into 2025. 

As a result of the cut, mortgage rates will be on course to return to more affordable levels, gradually improving the range of buyers in the market and their buying power. We expect this to feed through into more market activity in the autumn, particularly if there are further cuts to the base rate in the coming months. 

And we have already seen activity pick up as mortgage lenders start to factor in the first rate cut. The latest TwentyCi data indicates that market activity in July was slightly above (6%) what we would expect in a normal (pre-pandemic) market, having temporarily dipped 8% below the monthly norm in June.

What will happen to house prices?

According to Nationwide, house prices grew by 0.3% in July, taking annual growth to 2.1%. Though modest, it’s still likely to be the first time house price growth has outpaced the underlying rate of inflation since September 2022.  

An acceleration in house price growth is dependent on more significant reductions in the cost of debt. With that in mind, we are forecasting house price growth of +2.5% this year. However, steady cuts to the base rate should open greater capacity from 2025 onwards underpinning our forecast for total house price growth of +21.6% over the five years to the end of 2028.

Further information

Contact Lucian Cook