The cut in the base rate has led to an uptick in enquiries, especially from first-time buyers, brokers have said.
Last week, the Bank of England’s Monetary Policy Committee (MPC) lowered the base rate by 0.25% to 5%, the first time the base rate has been reduced since 2020.
Following the base rate cut, there have been some reductions in pricing, mainly of trackers and standard variable rates (SVRs) and some fixed rates, but brokers have said that the main consequence has been a bolstering of customer confidence.
Geraldine Williams, director at Bubble Finance Hub, said that the team had “observed a noticeable uptick in our enquiries”, with an estimated 10% increase following the base rate reduction.
“It seems our clients are just as eager to explore their options. First-time buyers are now more enthusiastic than they have been of late, keen to discover how much they can borrow with these new rates.
“Our existing clients with mortgage offers on the table are revisiting us, curious to see if they can obtain an even better deal. Additionally, we’re reconnecting with clients from our database who previously paused their plans due to higher interest rates. We are now re-evaluating their affordability and considering if this is the perfect moment to make a move,” she explained.
Williams said that it had been a “busy but exhilarating period for us”, especially given that August is holiday season, but the firm was “thrilled to assist so many clients in navigating these promising opportunities”.
David Baker, managing director at LIFT Mortgages, agreed that activity had jumped, adding that it was “like a switch has been flicked”.
He said: “People that I’ve been speaking to for months have all suddenly come back to the market and all seem interested in buy[ing], I think predominantly first-time buyers at the moment who have been saving over this period and are now keen to buy as rates become that bit cheaper.
“I’ve also seen a big increase in people at the £1m mark who are looking to move from flats to houses.”
Baker said that he expected the enquiry levels, as people who may have sat on the fence may have “started to realise it’s a good time to start thinking about it”.
Base rate cut has ‘breathed life into the market’
Nick Mendes, mortgage technical manager and head of marketing at John Charcol, said that there was a “frenzied start to the year”, but then there was a “dip in enquiries” as mortgage rates crept up due to “early overenthusiastic market expectations”.
He continued: “A few sticky months began to look like another tough year, especially with the prospect of a delayed bank rate decision and a general election yet to be called.
“Following the general election, we started to see a turn in trends, with activity picking up each week, and the bank rate certainly helping towards that. The key driver has been competitive repricing among lenders now that we have stability in our government, headline inflation coming down, and stable market pricing.”
He said it was seeing more remortgages and homemovers than it did a few months ago.
Mendes said: “Homemovers who have delayed committing to moving previously are now comfortable with the [notion] of borrowing in a higher rate environment and are looking to act before the property market becomes competitive and property prices start to increase.
“Those who are coming to the end of their fixed rate have experienced how quickly the market can change and are being more proactive in their approach. While some are delaying committing until the last minute to secure a potentially lower rate, others are taking the pragmatic approach of securing a deal now and continually reviewing.”
He said that, over the next six months, many clients would be coming off five-year fixed rates and face the impact of higher mortgage rates, and some coming off higher mortgage rates following the mini Budget.
Ceri Evans, director of mortgages and protection at Remoo Mortgages, said that although a base rate cut didn’t translate into an “automatic drop in fixed rates”, it has “breathed a bit more life into the market”.
Evans said: “We’ve seen an increase in enquiries from more confident and optimistic clients, and from clients who we had already placed in fixed deal[s] in the last few months who are yet to complete.
“The expectation from some clients was that rates on Friday would be automatically lower than they were on Thursday, and even though we know this is not the case, it’s always great to have the opportunity to speak to them and explain that the outlook is better than it was this time last year.”
He explained that, overall, it would expect that trend to continue as more people “begin to see that fixed rates have been dropping steadily over the past month or so, and this can only be good news considering how volatile the market has been in the last couple of years”.
“Another cut later this year, or early next year, will be more than welcome,” Evans said.
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
