The Bank of England’s extraordinary decision to cut interest rates to just 0.25% yesterday with no warning, reflecting the level of seismic coronavirus tremors running through the economy, has been welcomed by many property professionals and investors.
While lower interest rates are bad news for savers, they are good news for borrowers, including those taking out loans to invest in property.
Mark Carney, the outgoing governor of the Bank of England, stressed that the economic damage caused by the coronavirus remained unclear. But he suggested that the UK economy could shrink in the coming months.
He said early evidence from China suggested that the world's second largest economy was on course to contract in the first quarter.
Other nations were experiencing a “similar shift", he said.
Hedi Zidan, founder and CEO of proptech lettings agent Nestify, commented: “Global markets are showing increasing volatility and at times like this, it is important the UK government does all it can to minimise the impact on the housing market.
“The housing market is the backbone of the UK economy and can help to stabilise other industries in difficult times. That is why we welcome the government's decision to cut interest rates to inject some liquidity into the UK economy and property market.
“Now is not the time to add more punitive measures to 2.5m UK landlords who are integral to maintaining the health of the UK housing market.
“The decision will ensure that managing residential lettings remains an attractive option for a number of UK landlords and helps maintain healthy levels for UK tenants, whether they are searching for short, medium or long-term solutions.”
Founder and managing director of peer to peer lending platform Sourced Capital, Stephen Moss, commented: “The Bank of England’s attempts to steal the budget limelight will be welcome news for those looking to buy a home with the help of attractive mortgage rates, as well as delivering a boost to the overall spending health of the economy.
“However, for the many investors with their money piled into ‘cash’, the poor returns seen over the last decade look set to continue. This has already led to many pulling their funds in search of pastures greener and this has resulted in an increase in the popularity of alternative investment channels such as the Innovative Finance ISA.
“With these alternative platforms offering annual returns far greater than any traditional saving or investment options, this trend is sure to continue with the latest cut in rates.”