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MPC raises rates 0.25 per cent

The Monetary Policy Committee has today announced interest rates will rise 0.25 per cent to 4.25 per cent.

But in response National Association of Estate Agents chief executive Peter Bolton King says rates were likely to climb to around 4.75 per cent by the end of 2004.

He says whenever the Bank of England puts up rates inevitably a sense of uncertainty is created.

He believes rises in themselves will not damage the housing market because affordability is healthy in historic terms.

He says the last quarter point hike did not affect the market and he does not believe this rise will have any material effect except perhaps on first time buyers who will be further overstretched.

Bolton King says: “The Bank of England is not charged with controlling the housing market but will have been worried that mortgage borrowing has surged by over £9bn in March up 1.2 per cent from February and 15 per cent from a year ago. Clearly that sort of borrowing can not be sustained but we believe the housing market is buoyant and not over-heated in the present economic climate.”

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