The Bank of England lowered the interest rate to a historically low level

The decision of the Bank of England to cut interest rate to a historically low level of 0.25%, is not likely to have a significant impact on the real estate market, however, is a certain signal so don’t expect to increase the size of borrowing in the near future.

This is the first decrease in base rates over the past seven years and the lowest rate in the entire 300-year history of the Bank of England. In the early years it was expected that the Bank of England will raise interest rates, focusing on strong economic data, but a referendum on Brexit has made adjustments and now, according to the head of the Bank of England Michael Carney, the risks are so high that it does not exclude another reduction in rates before the end of the year. Economic growth in 2016 is expected to be 2.5%, below expectations in may. Increase unemployment the current level of 4.9% to 5.5% next year. The pound against the dollar fell by another 1.5% on the news of the reduction in the base rate.

However, experts of the market of real estate of great Britain believe that the market situation is good. As part of the market will see a positive effect from both Brexit and the reduction in the base rate. Indeed, some foreign investors fear looks now on the real estate market in the UK. Those investors who put their savings and earn in dollars, have already appreciated the advantage from the fall of the pound against the dollar and the reduction in base rate will enable them to obtain credit at lower terms.

Lower interest rates should encourage new families and first-time buyers afford homes. In addition, the mortgage market is expected flurry of applications for refinancing at a lower rate. UK banks will develop new incentive programs, and will actively compete, which, of course, into the hands of consumers.

However, there are skeptics in the housing market, who believe that measures introduced by the Bank of England, is not enough . The market is experiencing extremely negative effects from the impact of increased Stamp duty. For many Londoners, for example, the extortionate Stamp duty has become an insurmountable barrier in order to purchase real estate property, blocking all chances. Therefore, the British property market needs a stimulus package, which would rule out further price increases and would give impetus to the mass construction of affordable housing.

® Helen Entree. 04.08.2016 G.

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