Bad news for homeowners

Posted 2008-05-7

The Bank of England (BoE) has today announced that interest rates will be held at five per cent, meaning mortgage holders are unlikely to see a reduction in their payments.

Following a quarter-point reduction in April, the bank opted against slashing the base rate over fears about inflation as well as the soaring prices of oil and food.

Homeowners and those looking to buy had been hoping for a reduction in the rate from the BoE as the last cut, from 5.25 per cent to five, was not passed on by most lenders.

Speaking to the Guardian, Nicholas Leeming of propertyfinder.com said that action is needed by the bank in order to revitalise the housing market.

"The Bank of England cant afford to wait another month before it acts again. The housing market has come to a standstill but theres no shortage of buyers, just a shortage of mortgages which is now impacting the wider economy," he said.

Decisions on interest rates are taken by the banks Monetary Policy Committee.

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