Mon 2 Jun 2008
Is a rate cut this week realistic?
The Bank of England (BoE) could be set to frustrate housebuilders this week by keeping interest rates unchanged at 5% for another month.Last month it appeared that rates would almost certainly be cut at the Bank’s next Monetary Policy Committee (MPC) this week. However, economists are questioning whether rate cuts are the best way forward after the Bank recently warned that Consumer Price Index (CPI) inflation could reach as high as 3.7% this year.
The news will come as a bitter blow to lenders after the Bank of England today reported that the number of new mortgages being approved for house purchase hit a new low in April.
Simon Rubinsohn, the chief economist at RICS, commented: “Lenders are continuing to tighten up on the conditions accompanying new loans making it hard for first-time buyers to take advantage of the modest fall in house prices seen over the part few month.
"A collapse in transactions of this magnitude has major implications both for consumer spending and a wide range of ancillary industries."
Commenting on today’s mortgage approval figures from the Bank of England, Ross Bowen, managing director of Connells Survey & Valuation, said: "Yet further evidence that the property market is in need of real help. Inflationary pressures aside, the Bank of England must cut rates when they meet this week. First timers and other movers are out in the cold. We need an increased supply of mortgages, and for lenders to lift restrictive mortgage criteria and pass on lower rates to the consumer. Sellers must also acknowledge their homes may be worth less than they hoped to ensure the market can continue to support people moving.”
Posted by Marc Da-Silva
in Bank of England, Connells Survey & Valuation, News, Ross Bowen, Simon Rubinsohn on Mon 2 Jun 2008
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