SELL YOUR HOME QUICKLYBank of England keeps interest rates steady at 5%
The Bank of England decided to keep lending rates steady at 5% late last week, while many hoped for an interest rate cut that would bring some relief to the struggling property market.
A report in The Guardian explains that the Bank, when weighing up the demand to cut lending costs against the danger of inflation, finally decided that reducing the interest rate would be too risky. This decision was partly informed by International Monetary Fund (IMF) research, which suggests that global inflation is on the rise and aggressive action is needed in order to keep the situation under control.
"Signs of more general inflation pressures would justify a decisive policy response, lest the impressive gains in global stability attained in recent years be sacrificed," explained the IMF's deputy managing director, John Lipsky.
In the meantime, there seems to be no relief in sight for the UK property market. A spokesperson of propertyfinder.com, Nicholas Leeming, voiced his disappointment in The Guardian, saying, "The Bank can't afford to wait another month before it acts again. Mortgage lenders have all but withdrawn from the market, leaving many homebuyers unable to qualify for financing and many unable to get it at a price they can afford.”
Leeming went further to say, "The housing market has come to a standstill but there's no shortage of home buyers, just a shortage of mortgages, which is now impacting the wider economy. Inflation remains a threat, but further immediate intervention, as well as future rate cuts, is now essential to stimulate lending, the housing market and the economy."
For aspiring home buyers, the reality is that mortgage approvals are down by half of what they were a year ago. Builders have lost up to two-thirds of their business since then, and house prices are the lowest they have been in 12 months.
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