Luxury property in Wimbledon could become more attractive to international investors and UK-based borrowers following the Bank of England cutting its interest rate to 0.25%.
The move, which resulted in the value of the pound slumping 1.4% against the US dollar, is part of a £170bn package of measures designed to prevent Britain sliding into recession following the Brexit vote.
It means around 1.5 million property owners with mortgages that track the bank rate and another 3.5 million with other types of variable-rate home loans will see their monthly payments fall, according to the Council of Mortgage Lenders.
The decision to cut interest rates was approved unanimously by the nine members of the Monetary Policy Committee.
As well as slashing interest rates from a seven-year low of 0.5%, the Bank of England said it would lend as much as £100bn to banks to ensure the stimulus reached the economy.
BoE governor Mark Carney added that banks have “no excuse” not to pass on the lower borrowing costs to customers and will be charged a penalty if they do not lend. “The MPC is determined that the stimulus the economy needs does not get diluted as it passes through the financial system,” he said.
Azad Zangana, senior European economist at asset management company Schroders, says while the interest rate cut is likely to have only a marginal impact on the UK economy, lower mortgage interest rates will boost demand for housing.
He predicts that house prices in the UK will go up by around 6% this year.
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