What does a drop in interest rates mean for the property industry?



Following the Bank of England’s decision to cut interest rates in the UK to its lowest ever level of 0.25%, amid fears of a high probability of another economic crash, many within the property sector have been left wandering: what will become of the UK’s property industry?

Ever-since the UK decided to leave the European Union, there have been ongoing calls for the Bank of England to act upon the likelihood of a drop in the economy.

On the 4th August, the Bank of England made the not-so-shocking decision to take action, and since then, the UK have been settling into its lowest ever interest rates.

Over a week since the decision was made, your favourite property management software has taken a look into what this could mean for the property market.

Current home-owners with a mortgage

Current home-owners who have rather cleverly stuck to a basic-rate mortgage-rate are most likely feeling very smug right now, with monthly mortgage payments dropping in-line with the interest rates, those with a mortgage with companies without relevant “get-out” clauses will be in a very good position. However, those home-movers who have fixed their mortgage payments, may not be feeling quite so smug right now.

Buy-to-let investors

Investors who have taken-on a buy-to-let property will experience a better yield, based upon a continuing strong-demand in the property rental industry, and a cut in interest-rates, meaning profits increased overnight.


For those in a position to move home, or buy their first home, having saved their deposit, may benefit from a better mortgage deal.

Low rates support mortgage lending, and therefore with the new interest rate it will continue to do so. In addition, the Bank of England encourage lenders to allow consumers to benefit from the reduction in interest rates.

However, as the current mortgage market is so competitive, many lenders are already stretched to their best possible deals, and if they dropped their mortgage offerings any lower, they will have very little, if any, profit to make.


Those saving-up for their first home, or second home will be affected by the lowered interest rates, as it means less interest added to savings. However, in stark contrast, a healthy economy does mean savings elsewhere.

Therefore, savers are encouraged to make the most of help-to-buy ISAs, which is topped-up by the Government, which is a great way to increase savings to take the first step onto the property ladder.


Whilst the property market overall is stabilising, following a few years of rapid price rises, many have taken to blaming the UK’s decision to leave the EU.

Whilst we cannot say for certain, what we do know is whatever happens, The Property Software Group, proudly part of ZPG, have the right tools in place to support agents. Contact us today to discover more sales@cfp-software.co.uk.