Base Rate to Remain Unchanged

Yesterday, on May 7th, the Bank of England confirmed that the base rate will remain at the level of 0.5% for the third month in a row. The Bank of England also claimed that a further £50 billion will be poured into the country’s economy through the quantitative easing programme. Let us remind that the Monetary Policy Committee (MPC) has lowered the interest rate to the historic minimum in March 2009. The director of Property Portfolio Rescue (PRP), Nick Hopkinson, said although the base rate is highly unlikely to go up in the foreseeable future, this will have little impact on the lenders’ interest rates and the borrowers’ ability to secure a mortgage as most financial institutions stay cautious. He added that consumers should not be fooled by the good news that has been made available in the last weeks. Mr. Hopkinson is determined that house price still have a long way to decline, while the levels of unemployment will inevitably rise. Also, he believes that the number of repossessions will grow even further. He said that those who still waiting to sell or buy a property will be disappointed later. On the other hand, Keshav Thukaram, a managing director of an online property portal, said that it is no longer the time when interest rates boost the economy or activity in the housing market; instead, it is now the waiting time, which will show whether the quantitative easing programme and dramatic Budget will have any positive impact on the property market. He believes that unless first-time buyers and buy to let landlords, who represent vital housing market groups, have an opportunity to jump into the property market, a floor under housing transactions and price declines will take much longer to put. To sum up, it should be said that despite the low base rate set by the Bank of England, the majority of lenders are reluctant to provide the UK population with mortgage loans, which hampers the revival of the housing market.