In a widely anticipated move, the Bank of England's MPC has just voted to reduce the base rate to 4.50%. 

Today’s 0.25% reduction and the prospect of further cuts have been warmly welcomed by estate agents and will provide a major boost for both the property industry and the wider economy.

And it will be given an even warmer welcome by Labour as it struggles to fulfil its growth pledge.

The move comes after December’s inflation figures were lower than expected, dropping from 2.6% the previous month to 2.5%.

Swap rates, which affect the cost of fixed-rate mortgages, have been falling in anticipation of the move. Five-year swaps are down from 4.12% to 3.92%, and two-year swaps from 4.26% to 4.06%.

Some big mortgage lenders, including Barclays and Coventry Building Society, have already reduced their mortgage rates. Others are now likely to follow suit, which will give buyer confidence a significant lift.

The bank’s base rate has been at 4.75% since November last year and how far and how fast it would fall has been the subject of much speculation. All eyes now, though, will be on Trump and what effect his policies may have on the rest of the world.

In his last meeting, Bank of England Governor Bailey, though, refused to speculate on the impact Trump’s tariffs would have on the UK’s economy, saying “Let’s wait and see”.

In the US, however, the Federal Reserve has indicated it will now cut rates at a slower pace than was originally intended.

Industry reaction

Dominic Agace, Chief Executive Officer of Winkworth

Dominic Agace, chief executive of estate agents Winkworth said: “It’s a welcome move. We hope this will ensure the early momentum of this year continuing, where we saw the level of applicants registering 16% ahead of January last year, as people look to crack on with their lives after a year of elections.”

Via @TheNegotiator