The Bank of England’s decision to cut interest rates to 4.75% is good news for the property market in Northern Ireland and many homeowners here, it’s been claimed.
And it will be welcomed by buyers of second homes who were hit with a rise in stamp duty in last week’s Budget, property advisers said.
The Bank of England’s Monetary Policy Committee (MPC) voted to cut the rate from 5% in the second interest rate reduction this year.
It means that borrowers on tracker mortgages in Northern Ireland, which go up or down depending on rates, should see reductions of up to £30 on average in monthly repayments.
The Bank of England cuts interest rates for the second time this year
According to UK Finance, here are 52,946 homeowners in Northern Ireland on variable rates, including trackers – about one-fifth of the total.
And there are 185,637 people on fixed rate mortgages – nearly 80% of the total. If nearing the end of their fixed rate deal, they will be able to remortgage at a lower rate than previously.
Interest rates went up steadily between December 2021 and August 2023, reaching 5.25% at their peak.
Thomas Greenaway, property solicitor at O’Reilly Stewart Solicitors
Thomas Greenaway, property solicitor at O’Reilly Stewart Solicitors, said the rate cut alleviated “considerable unease” following the Budget after it increased the extra stamp duty paid on additional homes from 3% to 5%.
He added: “Despite the market challenges, the Northern Ireland housing market has remained buoyant in recent months. The reduction in interest rates which we have seen this year have been beneficial to purchasers…
“It is hoped that this latest reduction in interest rates will be reflected by lenders with more favourable mortgage products being offered to consumers.”
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Shonagh Maguire, a mortgage and insurance consultant at Reavey Financial Services in Newry, said high interest rates had created “fear and uncertainty” in the market.
“Those who have opted for tracker and variable rate mortgages anticipating the rate cuts will be pleased with the announcement as they will see their mortgage payments decreased.” Some mortgage customers had seen a jump of up to £300 a month in repayments due to the rising rate, she said.
Ms Maguire added: “The Budget announcement last week showed how fragile the UK economy is and so the Bank of England will be extremely cautious in future decision making.
“That Budget didn’t bring great news for the housing market, in particular for those buying second properties. With immediate effect second property purchases were hit with increased stamp duty.
“I had a number of clients who had their buy to let transactions affected. Literally overnight the house purchase was costing them a few thousand pounds more.
“Cheaper borrowing rates will hopefully go some way toward counter-acting that increase in stamp duty.”
Shonagh Maguire, mortgage consultant at Reavey Financial Services
One home owner in south Belfast was pleased with the interest rate decision. “I opted to remortgage with a discounted variable a couple of years ago with the idea that things wouldn’t reach the highs in which they did.
“Overall, it’s probably balanced out with a much lower interest rate during the first few months of the mortgage period.
“The latest cut is a welcome step for me and anyone else in a similar position and will see us saving maybe £40 a month in our repayments.
“I’d certainly like to see falling rates continue, particularly from a personal point of view.”