The line ‘neither up nor down’ from the nursery rhyme, ‘The Grand Old Duke of York’ could soon become the theme tune for The Bank of England’s Monetary Policy Committee after its decision to again maintain interest rates at 5.0 percent. Such was the expectation that this would be the fifth consecutive month of no movement that it has led to a fairly muted response from the property industry on this occasion.
The decision has further been overshadowed by the news from America that the government has ‘done a Northern Rock’ and bailed out its two biggest mortgage lenders Fannie Mae and Freddie Mac with an injection of up to $100 billion.It was hailed as a positive move by the world’s stock exchanges where shares began to rally. But there was further drama when the London Stock Exchange had to close down for seven hours on Monday after its IT systems went into meltdown.
The system appeared unable to cope with the amount of traffic being generated by the announcement. An investigation into how and why this happened has been launched.The Forum of Private Business (FPB) believes the Bank of England has missed another opportunity to stimulate the growth of small businesses, which are increasingly struggling as a result of the credit crunch.
“A rate cut would have boosted small firms’ confidence, as well as that of consumers, and would have helped them trough the difficult times that they face in the current credit crunch,” said Nick Palin, the FPB’s Director of Finance and Administration.
He added that a commitment to reducing interest rates in the run-up to the Budget in 2009 would be an indication that these issues are being taken seriously by the Government.James Thomas, head of residential development and investment at Jones Lang LaSalle, said: “The continued challenges in the mortgage market, coupled with sluggish economic performance, suggest that the downward trend in house price is likely to continue well into 2009. Interest rates will most likely be kept on hold until year end, with several cuts in 2009 which would provide a much welcome relief for homebuyers”.
Lucian Cook of Savills residential research said: “Like most other market commentators, our response to this week’s government initiatives designed to help the housing market was lukewarm at best.“By contrast, a serious cut in interest rates, fed through to reduced mortgage costs, would begin to address the issues which are really blighting the market. “While we recognise that inflationary factors make a meaningful cut unlikely in the foreseeable future, from the perspective of the housing market this is desperately needed, both to stimulate activity and ease the concerns of home owners.”
source: http://www.residentiallandlord.co.uk
-
Flickr Photos
More Photos
No Comments Yet