Responding to the MPC decision to hold interest rates at 5.75 per cent, the Council of Mortgage Lenders (CML) says that the hold was widely expected but that a cut in November remains the most likely prospect.
Michael Jones, CML director general, said: We did not expect the Bank to cut rates today, but we do hope for and anticipate a cut in November. Even this is not a certainty though, so borrowers should continue to plan for rates at or around current levels.
Pricing in the mainstream market is stable, and fixed rates have started falling recently, but there is still uncertainty about how long it will take for stable funding to return to the sub-prime market. In the meantime, borrowers in this sector are facing tighter criteria and higher rates, although the availability of funding does seem to be improving.
Robert Piece, chief executive of Allied Surveyors, said: This is a lost opportunity demonstrating a reactionary lack of imagination. It is essential to restore confidence to households and to ease the path for first time buyers and existing homeowners who are having to service expensive mortgages. A decrease of 0.25 per cent would have sent a positive signal which would prevent an untimely reduction in consumer spending and a host of property repossessions over the winter.
Jacob S, chief executive of property website propertyfinder.com, said: It is high time that base rate cuts came onto the MPCs agenda. Turmoil in international credit markets has effectively been a rate hike by another name. House price growth has been moderating for some time and confidence in the housing market has been dented. The MPC should now be cutting rates to prevent the housing markets orderly slowdown becoming a disorderly rout.
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