Fri 9 May 2008
Interest rates: The industry digest
Yesterday, the Bank of England ignored the industry’s plight in refusing to cut interest rates in an effort to control inflation, and thus missed a chance to restore buyer and lender confidence in the housing market. Did it make the right decision? Will it make any difference to the current economic climate? We asked the industry its views.Chris Crook, subsidiary managing director, Countryside Properties (pictured)
“Interest rates are not the real issue in the market at the moment – bearing in mind properties were still selling in the 1990s when interest rates were upwards of 13%.
The real issue is the lack of loan availability for first-time buyers. The Bank of England should be pressuring the government to consider a range of benefits for first-time buyers to get them on the housing ladder. One widely advocated idea is to offer first-time buyers tax relief on mortgage interest rates to stimulate the market.
Ultimately, the housing market is a fundamental driver in the country’s economy – if it’s allowed to stagnate, we will see some serious issues developing.”
Chris Coates, managing director, Galliford Try Homes
“Housebuilders and industry alike will be disappointed at this decision. While we continue to weather the storm, the fact remains that the government needs housebuilders to provide more homes in the long term, and lenders need to avoid stagnation in the market. A cut would have signalled to buyers and sellers that the market will improve.
Despite the Bank of England’s warning to banks to be bolder in lending last week, it’s being left to housebuilders to offer ways to assist buyers in today’s climate. It’s not just our responsibility to keep the market going, however – we need further cuts in interest rates, more incentives from the government to help buyers, and we need lenders to stop being overly cautious, and introduce more affordable rates for those who want to buy.”
Mike Ratcliffe, chief executive, Wolsey Securities
“While the decision by the MPC not to cut interest rates is disappointing, it’s not longer the most significant factor in preventing the economy from weakening further. The housing market is currently the key factor in deciding our future, and we must all wait to see the government’s next move.
Gordon Brown is being inundated with calls for action from the industry and estate agents, all of whom I suspect are now working on survival plans and adjusting their business models to cope with the downturn in the volume of transactions. What the market needs is a stimulus to bring consumer back to the market as well as ensuring the provision of mortgage finance is available and on terms that the average purchaser can meet. This needs to happen off the levels of consumer depression and frustration we are seeing the US government struggling with in the North American housing market.”
Posted by Natalia Gameson
in Bank of England, Chris Coates, Chris Crook, Countryside Properties, Galliford Try Homes, Gordon Brown, Mike Ratcliffe, News, Wolsey Securities on Fri 9 May 2008
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