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New Year Comfort for Homeowners and Property Investors

19th December 2007 | back to article listings BACK    print this article PRINT

Chief Executive of Assetz, Stuart Law, comments on news of the Monetary Policy Committee’s (MPC) nine-to-zero majority decision this month:

“Following the long overdue move by the Bank of England’s Monetary Policy Committee (MPC) to drop interest rates this month, it has emerged that the decision was taken with a nine-to-zero majority.

“It is good to see, from this unanimous verdict, that the MPC is finally reacting to the very clear and present dangers of the credit crunch, as opposed to the far more vague concerns in relation to inflation. Inflation will end the year pretty much bang-on its 2% target and I would expect further downward movement below target in the spring, allowing interest rate cuts to take place quickly.

“The drop in interest rates this month is already benefiting borrowers, particularly those on base-rate tracker mortgages, and the recent injection of huge liquidity into the money markets should see off the credit-crunch concerns but leave homeowners and buy-to-let investors with much lower mortgage rates. Following the latest, unanimous voting news from the MPC, I am confident that we will see another two decreases in base rates by March next year, down to 5.0%. In fact, we could indeed see further drops later in the year with rates dropping to as little as 4.0 – 4.5%.

“First time buyers, whilst likely to be nervous from recent press comment, have a golden opportunity over the next few months to pick up a bargain from a developer or vendor looking to sell quickly. I would recommend they move quickly to take advantage of reducing interest rates over coming months whilst getting a great property price. The massive shortage of property in the UK will not go away for many years or even decades to come, and prices will strengthen again in due course as a result.

“With regard to property investment confidence, rental demand remains the key short term driver. RICS has recorded tenancy demand above available supply of property for three years now, and according to recent RICS, ARLA and Paragon surveys, rents are already up, rising by as much as 10% in many regions and 19.3% on average in London for 2007.”

 

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3970.html. Alternatively, please see our full press release archive.

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