Interest rates unlikely to be cut say National Homebuyers

Interest rates are unlikely to be cut for several months and the housing market is not as strong as it was last year.

[UKPRwire, Fri Nov 02 2007] These are the conclusions drawn following the publication of the Nationwide house price index for October.

Although the index recorded a slight rise in house prices, the bank is concerned that there are underlying problems in the market.

"While some may be tempted to interpret October's numbers as a sign that house prices are immune to deteriorating affordability and tightening credit conditions, such a conclusion would be misguided," said Fionnuala Earley from Nationwide.

"The underlying dynamics of the market, however, are clearly not as strong as this time last year," she added.

The figures also led Howard Archer from Global Insight to predict that any drop in the base rate of interest will now be put back until 2008 and he also did not rule out a correction in the housing market

"[The report] substantially dilutes the case for an interest rate cut in November. Indeed, the data reinforce our view that the Bank of England will not trim interest rates until next February," he said.

"We fully acknowledge that a sharp housing market correction is a genuine possibility."

Fast property sale expert, Julian King of National Homebuyers adds, "A rate cut remains unlikely, but thankfully so does a further rise.

"Even a quarter point rise would dramatically increase the number of possession orders presented. We - along with Price Waterhouse Cooper and the CML are predicting in excess of 30,000 repossessions by the end of this year".

Mr King is a director of National Homebuyers, the UK's leading fast property purchase firm that guarantees to make an offer on any property in the UK for vendors who need a quick sale.

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