First time buyers given huge boost following Bank of England announcement

First time buyers have been given a huge boost following the latest Bank of England announcement.

Being able to buy a home or property is a huge goal for many young professionals up and down the country.

But it’s unfortunately become something that feels more and more unachievable for plenty of people with the UK house prices previously found on average to be over nine times the annual salary.

And as a generational divide is solidified in the ages of those buying homes, we’ve all heard the ‘stop buying avocado toast’ and ‘cancel your Netflix subscription’ as ‘helpful’ pieces of advice.

However, while things might feel pretty rough as foregoing brunch doesn’t exactly make a dent, today’s (8 May) announcement from the Bank of England changes interest rates.

It's a boost for UK buyers. (Getty Stock)

Marking the fourth rate reduction from 2024’s peak of 5.25 per cent and the second this year, it has now cut interest rates from 4.5 per cent to 4.25 per cent.

After analysts predicted the move, this decision was confirmed at 12:02pm (following a two-minute silence to mark VE Day).

This move will make borrowing money by businesses and individuals less expensive. Although, it will mean there are likely to be lower returns for savers.

For those looking at buying themselves a property, this all essentially means mortgage rates should fall alongside the new interest rate level in reflection of the market moving.

And if you have a lower mortgage rate, your monthly mortgage repayments should also be lower.

But sure, having lower rates is a boost but there’s still the crippling reality that house prices are still very high. So high that ‘not buying coffees’ isn’t quite going to help out enough.

It was previously reported that house prices have increased over 100 fold since 1966 – good for you boomers.

It isn't as great for those looking to save though. (Getty Stock)

Halifax put the average house price in the UK at £297,781 for April, putting the annual growth rate at +3.2 per cent, reaching its highest level so far this year.

And Amanda Bryden, Head of Mortgages, said (prior to today’s announcement): “Overall, the market continues to show resilience despite a subdued economic environment and risks from geopolitical developments. There is likely to be a bump-up in consumer price inflation as household bills increase, but with further base rate cuts also expected, we anticipate a similar trend of modest price growth this year."

As mentioned, while lower base rates may help those buying, it is bad for those looking to save rather than make investments.

Rachel Springall, of Moneyfacts, previously said: "Savers are the ones who feel the force of cuts to interest rates. Those savers who use their interest to supplement their income will feel overlooked if rates plummet."