View more on these topics

Rate fears as George warns on price rises

Bank of England governor Eddie George&#39s declaration last week that the boom in the housing market is unsustainable has split industry opinion over whether it will lead to a hike in interest rates.

Speaking at a Treasury select committee meeting last week, George and other monetary policy committee members told MPs that the recent growth in UK house prices is “unsustainably strong”.

George said: “We do not believe the current rate of house price growth is sustainable but it is a factor driving consumer spending.”

Wriglesworth Consultancy analyst John Wriglesworth has interpreted the comments as an indication that George believes house price rises will slow naturally without the MPC having to increase interest rates significantly.

But the Council of Mortgage Lenders says it expects the MPC to “move on interest rates sooner rather than later” and warns that the longer that prices continue to rise rapidly, the sharper the correction to the housing market will be.

Prudential national mortgage manager John Malone is calling on lenders and the Treasury to take measures to dampen the buy-to-let market to free up more new properties for first time buyers.

Wriglesworth says: “It is blindingly obvious that this is recognition that house prices cannot continue to increase a rate of 20 per cent a year, nor can consumer spending continue as it is. George is saying natural market forces will slow house price rises – they will go down of their own accord.”

Malone says: “The buy-to-let market is partially responsible for causing the market to overheat. Lenders could play their part and be far more discerning in their underwriting requirements.

“A further measure could be the introduction of additional stamp duty payment on all buy-to-let and similar properties held by speculators manipulating the market to inflate the price.”

Recommended

Northern Rock Guernsey – Offshore Fifty Fifty Issue 8

Tuesday, June 18 2002 Type: Offshore guaranteed equity bond and high interest account GUARANTEED EQUITY BOND Aim: Growth linked to FTSE 100 index Minimum-maximum investment: £5,000-£2.5m Term: Five years Guarantee: Original capital returned in full at end of term Return: Up to 75% of growth in the FTSE 100 index over term Closing date: July […]

Mortgage Intelligence launches personal loan service

Broker club Mortgage Intelligence is launching into personal loans through partnerships with Halifax and the Royal Bank of Scotland which means its members can offer their clients loans as well as mortgages. Halifax will pay brokers a procuration fee of one per cent of the loan amount while RBS will make a flat payment of […]

IFAs get white-label supermart

Fund supermarket Fundsdirect is teaming up with Microsoft to develop a consumer web solution for IFAs.The service, launched at the Adviser.tech conference in Manchester last week, will allow IFAs to offer their clients a white-labelled fund supermarket site where clients can check the value of their own holdings.The site will give clients the ability to […]

Unipass offering online freedom

Digital certificates from Origo will save providers and IFAs time and money, Origo chief executive Sandy Nielson, told last week&#39s inaugural Adviser.tech conference in Manchester.Through its Osis subsidiary, Origo is launching Unipass, an individual technology certificate for every IFA, recognised across the financial services sector, for life offices to identify who they are dealing with […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment