Property agents are calling on the Bank of England to cut interest rates after the latest inflation figures showed a drop.
Inflation fell to its lowest level in more than two years this morning at 3.4%, increasing the pressure on the Bank’s Monetary Policy Committee to cut the base rate.
The Bank held the base interest rate at 5.25% for the fourth time running last month, and warned that a cut wasn’t imminent.
Result
It is due to announce the result of its latest meeting tomorrow, with speculation that it will hold the rate again at 5.25%.
Mortgages are creeping upwards, increasing the amount homeowners have to pay if they come off a fixed rate.
Ideal time
Propertymark says now is the ‘ideal time’ to make a cut to give the housing market a boost.
This is an ideal time for the Bank of England to start considering a cut in interest rates.”
Nathan Emerson, CEO of Propertymark (main picture), says: “This is an ideal time for the Bank of England to start considering a cut in interest rates when they meet this month.
“Andrew Bailey, the Governor of the Bank of England, said recently that inflation does not have to fall to 2 per cent before the central bank starts considering cutting interest rate,” he says.
“Propertymark’s own Housing Insight Report shows that there has been an average 120 per cent increase in the number of potential buyers registered per member branch, and this is potentially an ideal time to revitalise the housing market.”
Boost
Simon Gammon, Knight Frank
Simon Gammon, managing partner at Knight Frank Finance, says: “Today’s figures will provide a nice boost to sentiment in the housing market. The decision by many lenders to notch up mortgage rates recently took people by surprise, but today’s figures should steady the ship. The drop in inflation may even pave the way for a spate of cuts to mortgage rates during the coming fortnight.
“That said, these cuts will be pretty marginal. We don’t expect mortgage rates to begin falling more meaningfully unless we see an outsized drop in the annual rate of inflation during the next two releases, or until the Bank of England begins cutting the base rate. The lenders have cut their margins thin in an attempt to maintain market share, so they’re largely out of options until their cost of funds begins to fall.”
Most agents believe the recent Budget was a wasted opportunity, and the Government doesn’t know how to help the property industry.
Findings from two major surveys reveal the discontent among estate agents with Chancellor Jeremy Hunt (main picture) and other ministers responsible for housing policy.
Inadequate
A poll of 833 property professionals, commissioned by GetAgent, found that the vast majority were disappointed with the lacklustre Budget.
More than a quarter (27%) described the Budget as ‘inadequate’, and a further 54% said it was ‘underwhelming’.
The industry had been expecting an announcement on a 99% mortgage, but this was scrapped just days before, a decision that 56% agreed with.
Stamp Duty
There had been hopes of another Stamp Duty reduction, and 71% believe this should have been included by the government.
Two thirds (67%) said there should have been a buyer incentive introduced to help kick-start the market, with 64% stating they would have liked to have seen more focus on housing supply.
And a massive 83% think more should have been done to improve the homebuying and selling process.
The Tory party may as well have ignored the property market altogether.”
Colby Short, Co-founder and CEO, GetAgent
Colby Short, Co-founder and CEO of comparison platform GetAgent, says: “During what is likely their last budget for years to come, the Tory party may as well have ignored the property market altogether.
“Despite predictions, or maybe hopes, that there may have been stimulii for the property market, none were forthcoming.”
Meanwhile, in a snap poll of 160 letting agents carried out by tenant referencing firm Goodlord, 75% of respondents said they didn’t think the Government understood the pressure facing the sector.
And a further 19% weren’t sure, with just 6% saying they thought the Government truly understood.