The cut in UK interest rates is expected to encourage even more activity in the Northern Ireland housing market following one of the busiest opening quarters in recent history.
The Bank of England’s decision to lower the base rate from 4.5% to 4.25% follows a slowdown in inflation in recent months.
Andrew Bailey, governor of the Bank of England, said: “Inflationary pressures have continued to ease so we’ve been able to cut rates again.”
Cuts to the base rate since last summer have contributed to an upsurge in house-buying activity in the north during recent months.
HMRC figures indicate 7,130 homes were sold in the first three months of 2025, making it the second busiest opening quarter for the north’s housing market since 2007.
While increases in stamp duty from April 1 was a factor, the falling rate of interest has proved significant.
Danske Bank has already revealed that lending approvals for first-time buyers in Northern Ireland increased 50% year-on-year in the first quarter of 2025.
The bank said the expectation of the cut in interest rates this year resulted in two-thirds of those first-time buyers opting for two-year fixed rate mortgages.
Recent analysis from PropertyPal put the average price paid by first time buyers in Northern Ireland at around £178,000 in early 2025.
Based on a 10% deposit and a two-year fixed mortgage taken out over 30 years, PropertyPal estimated monthly repayments of £813 per month in February.
The 0.25 percentage point cut is expected to cut around £25 per month from that monthly total.
But the recent increases in property prices are expected to more than offset potential savers for first time buyers.
The latest survey from the Royal Institution of Chartered Surveyors (RICS) pointed to a sharp increase in new buyer enquiries during April.
But property professionals continue to report shortages in supply.
That high demand and low supply environment could drive house prices up further over the coming months.
While they represent a small proportion of the Northern Ireland market, homeowners with a tracker mortgage can expect some savings in the wake of Thursday’s interest rate cut, assuming that their lender passes on the base rate cut in full.
Around 85% of outstanding UK mortgages are fixed rates – and homeowners on these deals will not see their rates change until they move onto a new deal.
But many lenders have been chopping rates in recent weeks, including several offering deals at sub-4% levels.
The government-backed index uses sales data from Land and Property Services.
The official index for the first quarter (Q1) of 2025 is due to be published in two weeks.
Data from PropertyPal recently put the average house price in the north at £225,986 for Q1 2025. That price does not factor in new build homes sold during the period.