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Media rate frenzy is condemned by CML

The CML has attacked national media reports which it says misrepresent its views on the housing market and future interest rates.

The Sunday Telegraph ran an article last weekend saying that the CML predicts that interest rates will double to slow down the booming property market.

The Sunday Telegraph quotes CML director-general Michael Coogan as saying it was too late to control the market with small rate rises and “aggressive interest rate hikes are necessary”.

The Daily Mail and The Express followed on Monday with similar claims.

But Coogan has told Money Marketing that the stories do not represent his or the CML&#39s views.

He says the CML now forecasts that rates will rise to 5.25 per cent by the end of the year, which is higher than its January forecast. He says nothing in its forecasts states that the CML expects rates to double and describes the claims as “spun out of control by the media machine”.

Coogan says: “Our forecasts observed that if the MPC specifically decided to target house price inflation and bring it down to single digits immediately, then interest rates would need to double. This was only ever designed as a hypothetical observation – we do not want it to happen, nor do we believe that it will.”

The CML expects house price growth to end the year on 14 per cent, with a slowdown in 2005.

The resurgence in house price growth has “increased the risk of a hard landing” but the CML does not expect a widespread fall in house prices but possibly some localised falls.

Interest rates are expected by the CML to hit 5.25 per cent by the end of this year and 5.5 per cent by the end of 2005.

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