NAEA Plea With Bank of England
NAEA plea with Bank of England regarding interest rates
THE National Association of Estate Agents have made a plea to the Bank of England to “seriously consider the potentially adverse effect” of any further interest rate changes after the fifth rate rise in a year.
The base rate rose a quarter of a per cent to 5.75 per cent on July 5 and there has been widespread speculation that another increase could follow.
But the NAEA fear that the latest interest rate rise may over-correct a housing market that the Association believes is already “levelling out”.
Peter Bolton King, the NAEA’s chief executive, said: “It is disappointing that this rise has occurred given that there were signs in many parts of the country that the property market was starting to level out, the exception being London.
“The problem in London however is not going to be resolved by increasing interest rates as the pricing problem in that region is down to the lack of supply.
“We urge the Bank of England to seriously consider the potentially adverse effect of any further interest rate changes and the consequences that this will have on the housing market, especially bearing in mind how vital this sector is to the UK economy.”
The Royal Institution of Chartered Surveyors, meanwhile, fear that the latest increase will “dampen demand” — and are bracing themselves for further rises in the coming months.
David Stubbs, senior economist at the RICS, said: “This latest increase will further dampen housing demand as first time buyers find their borrowing constrained, and households who are coming to the end of their fixed rate deals face a big increase in their monthly payments. “In fact, someone with a £100,000 mortgage who is coming off a two-year fixed rate deal in the next few months will face an increase of around £100 in their monthly repayments.
“Furthermore, this may not be the end of the pain.
“With economic growth strong both at home and abroad, a resilient housing market and elevated inflation expectations, it is likely that the Bank of England will choose to push interest rates up again in the coming months.”
