Bank of England under pressure to cut rates
April 12, 2008
The Bank of England has found itself facing pressure to cut interest rates again, following reports that house price growth had fallen to its lowest level in twelve years. According to officials from Nationwide house prices today are just 1.1% higher than they were at this time last year, and this reflected the smallest increase since 1996, when the Conservative Party was still in power.
The report showed that even February had a far more impressive house price growth level of 2.7%, and the latest figures have seen the average house price now fall to £179,110. Average house prices in London are higher than this, standing at around £300,000. The Nationwide released these figures just shortly after announcing that it was raising its mortgage interest rates. It is thought that the actions being taken by lenders to try and close the doors on new mortgage customers could contribute to the decline in house prices.
Although the Bank of England has already cut the base rate twice since December, with a further rate cut expected in April or May, officials from the central bank have admitted that these rate cuts have proved fruitless for many homeowners, as a result of lenders putting up their mortgage interest rates. The Bank of England added that despite the rate cuts applied over the past few months the cost of mortgages had not changed since last August.
The governor of the Bank of England recently indicated that the next rate cut could be this month rather than in May. One Nationwide official said: ‘Since the last meeting, the collapse of Bear Stearns and the fallout from false rumours of problems in a major UK bank may have helped to shift the focus of the monetary policy committee to the need to loosen conditions in the financial markets. We think these latest developments, along with the continued weakening in the housing market, will mean the MPC will bring forward its rate cut to April.’
- The pressure is on for the Bank of England Further pressure is being piled on the Bank of England to cut the interest rate, as officials points out that Britain could otherwise face the worst effects of recession. With the Monetary Policy Committee meeting
- No change in interest rates for June Following the Monetary Policy Committee meeting, which was held earlier this week, the Bank of England has announced that the UK base rate is to be kept on hold for yet another month. This is
- Call to Bank of England to cut interest rates A number of industry professionals and agencies have been calling upon the Bank of England to cut interest rates to benefit the economy, according to recent reports. Since August 2006 interest rates in the UK
- Drop in insolvency numbers A recent report has shown that the number of people that are being declared insolvent in the UK has fallen across England and Wales. The third quarter of the year saw a drop of 3%
- Continued increase in property prices Recently released figures have shown that there has been a continued increase in property prices in the UK Officials from the Nationwide Building Society have said that house prices have now risen for the fourth
Comments
Got something to say?