Interest rates: Bank of England cuts rates to 5%

Interest rates: Bank of England cuts rates to 5%

The long-awaited cut in the Bank of England base rate finally materialised on August 1st, signalling the Bank's confidence that inflationary pressures are slowly coming under control.

This first cut since 2020 reduces the rate by a quarter of a percentage point and will be welcome news to homeowners with variable mortgage rates – or those considering a move.

The Monetary Policy Committee voted by 5 votes to 4 to cut rates and the Governor made clear that he wants to proceed with caution saying 'we need to make sure inflation stays low and be careful not to cut 'too quickly or by too much'.

Commentators now expect one or possibly two more cuts before the end of 2024. This will also be a welcome boost for housebuilders who rely on borrowing to finance new developments – and their role is critical role if the government is to meet its ambitious housebuilding target. Source: Bank of England, Dataloft by PriceHubble. July 2024