View more on these topics

Base line serves up mixed views

Brokers are split over the effect of base rate increase and the Bank of England Governor&#39s comments on house prices and buyer activity.

Chadney Bulgin partner David Thomas believes Mervyn King&#39s comments have had as much effect on the housing market as the recent 0.25 per cent base rate rise.

He says levels of transactions have dropped since interest rate rises in May and June and clients are citing King&#39s speech as the reason that they are acting with caution.

But Mortgageforce managing director Rob Clifford says he has seen no drop-off in demand but there has been a short-term preference for fixed rates. He says in the week after the last base rate increase, borrowers were keen to have a fixed rate but buying habits are already changing in favour of capped rates and some cashback and discounted products.

Clifford says a slowdown from the extraordinary growth that the housing market has seen over the past 18 to 24 months is inevitable and is not unhealthy.

He says: “The base rate increase has not quelled demand for mortgages but has changed buying habits in the short term. For people who want certainty, a fixed rate is worth its weight in gold.”

Thomas says: “Estate agents have told us that the number of new applicants has dropped dramatically and feedback indicates this is because of base rate increases and King&#39s comments. I think there will be a reduction in house price increases but we will not see a drop as the base rate is still historically low.”

•King&#39s speech, p34

Recommended

Campaign fights for forces&#39 pensions

A Lincoln IFA is co-ordinating a campaign for compensation for members of the armed forces who served for over 20 years but have been refused any pension. Michael Kennedy, a sole trader from Sleaford, is a spokesman for the Combined Armed Forces Federation, a pressure group for servicemen denied pension rights. Anyone in the forces […]

Axing jobs will further damage admin standards

I, for one, am not remotely convinced by Norwich Union&#39s bland and tired old claim that cutting another 950 jobs will help them “to ensure the company continues its drive for efficiency”. We have seen and heard it all before, not least in the wake of the closure of Norwich Union&#39s Cheadle Hulme office. Like […]

Blair leaps into our list as Brown clings on to power

Chancellor Gordon Brown keeps top spot in this year&#39s Money Marketing Power & Influence list, with the consumer shooting up from 13th to second place. Incoming FSA and Bank of England chiefs John Tiner and Mervyn King replace Howard Davies and Eddie George in the top five while Ron Sandler falls out of the list […]

Kelly tells product providers that cap cash is meant to pay for advice

The Treasury has pledged to review the 1.5 per cent price cap after three years to ensure that product providers are using the rise to pay for advice. Speaking at a Treasury select committee meeting on Monday, Treasury financial secretary Ruth Kelly told MPs that providers should be using the 0.5 per cent increase in […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment