Bank of England faces renewed pressure to cut interest rates

As house prices continue to fall and the number of home repossessions rises, the Bank of England faces mounting pressure to cut interest rates this week. The Times today reported that the bank was under “intense pressure” to reduce interest rates – by a reported quarter of a percentage point – as house prices fell to their lowest point since the crash of the early 1990s.

According to The Times, Halifax’s latest market figures reveal that the average house price in the UK dropped by nearly £5 000 – or 2.5 percent – last month. And, while Gordon Brown believes that the significant gains of the past decade will compensate for this latest drop, Halifax’s statistics show that growth in property prices is at its lowest level in 12 years. In fact, three regions – namely Wales, West Midlands and the South West – are experiencing negative annual house price growth as property values sink below last year’s figures.

The Times reported that Mr Brown, speaking to the BBC, conceded that the current situation was a challenging one, but said that Britain was in a better position than ever before to manage such slowdowns in the housing market. “We have seen house prices rise by about 180 percent over the last ten years and they have risen by about 18 percent over the last three years, so a 2.5 percent fall is something that is containable,” he told the news network.

The Bank of England will tomorrow announce its decision regarding interest rates cuts – although many analysts believe that a downward adjustment would not be enough to curb the current crisis.

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