The Bank of England’s MPC voted to maintain a rate of 5 per cent, a decision the CML says is disappointing but not surprising.
CML director general Michael Coogan says: “We understand the conflict between slowing economic growth and rising inflationary pressures, and the uncertainty over some of the data reflected in the split views of MPC members last month. However, the MPC had an opportunity to act to anticipate the worsening economic environment today, and it is disappointing that there has been no change.
“Mortgage and housing market conditions will remain challenging for the rest of this year, but the majority of existing borrowers are coping well. Anyone who is in financial difficulty, or thinks they may have a problem in the future, should contact their lender or a debt adviser.”
John Charcol senior technical manager Ray Boulger says: “This pause in the programme of rate cuts will allow the MPC time to assess the impact of its Special Liquidity Scheme available to Banks and five Building Societies before deciding on the scale and timing of further cuts.
“So far the impact on three month Libor has been fairly muted, although the rate has edged down to 5.79%, the lowest since Bank Rate was cut to 5 per cent last month. This compares with the recent peak of 6.01 per cent but the Bank Rate/3m Libor spread remains exceptionally high.”
“Availability of mortgage funding remains very tight, with lenders adopting various methods, in addition to pricing, of restricting demand.”
Cutting rates would have little effect on the housing market. Prices were too high and the credit crunch has stopped lenders lending. A substantial correction in housing prices has been on the cards for a couple of years
Simon Trow IFA Pentagon Wealth Development
Typical blinkered, short term, vested interest rhetoric. Before their precious housing market can bounce back to produce excessive house prices (why, it don’t do anyone any good), the economy has to be fixed, and that would require a raising of interest rates to stave off the further decline of the pound and control inflation which is about to take off.
Actually, the economy is so messed up, partly caused by this excessive greed in the housing market that it probably don’t matter if the interest rates go up, down or sideways. We have all these organisations in the UK, and none of them can offer the required skills or management to prevent a boom in the first place. What did the Council of Mortgage lenders do to prevent this from happening. Another useless, waste of time organisation, along with a government having the same qualities.
The MPC were right to hold rates at 5%. We need to see if the Bank of England’s Special Liquidity Scheme yields some benefit and also monitor inflation.
Simon Reeks director Solution Mortgages