06 Mar, 2008
Marcel Le Gouais
Bank of England's decision to freeze interest rates at 5.25%
will deal another blow to borrowers, claim firms across the
Many brokers and estate agencies believe the Monetary Policy
Committee needs to cut base rate next month to alleviate problems
now affecting consumers.
Jonathan Cornell, managing director at Hamptons International
Mortgages, says: "With inflation forecast to rise above 3% by
the end of the year, it seems the MPC has remained true to its word
and, at the risk of economic slowdown, is ensuring that maintained
inflation remains its primary concern."
He adds: "Such a decision will come as another blow to struggling
"The two rate decreases since December have done little to
alleviate the increases in mortgage repayments and today's decision
comes at a time when certain major lenders have actually increased
the interest on their top line rates.
"With next week's budget looming, today's decision is unlikely to
enhance optimism about what lies ahead for homeowners next
David Newnes, managing director of Your Move estate agents, says:
"The recent rate cuts haven't been enough to alleviate the
pressure on banks - and it's consumers who are suffering.
"We need one more cut to tip the balance. The last two cuts
have not been passed onto the borrower yet. A third would have
allowed banks to put the borrower first."
Eamonn Rice, chief executive of Mform.co.uk, says: "The bank's
failure to cut has just delayed the inevitable and increased the
probability that a bigger reduction will be needed soon.
"We believe there should have been a 0.25% reduction."
He adds: "It is clear that the credit crunch is having a meaningful
impact on consumer spending and that this will increase as
borrowers look to remortgage throughout the year. We estimate
between 40,000 and 60,000 borrowers will be remortgaging every
month between now and August."
Steven Marks, lending executive at Newcastle, says: "The
committee has the difficult task of balancing the slowing housing
market with rising energy and food costs, and our current feeling
is that they will wait for a few months to see whether a more
settled picture emerges."
He adds: "It is, however, encouraging that a number of large
housebuilders and estate agents have confirmed in recent weeks that
viewing activity is increasing, which may be an early sign that the
housing market has reached its lowest point."