Mortgage broker makes predictions for house prices and interest rates in 2008
January 17, 2008
Industry officials from the mortgage broker John Charcol have been making predictions with regards to house price movement and interest rate movement for the coming year. Many industry professionals have been speculating over how house prices will perform and what the Bank of England will do with interest rates over the course of the year, with the general consensus being that house prices will stagnate or fall slightly and the Bank of England will cut interest rates two or three times over the course of the year, taking both economic slowdown and rising inflation into account.
It is thought that although house prices are set to fall over the course of the year, there is very little chance of a sharp decline in property values. Although there was no interest rate cut for January, as many had hoped there would be, officials from John Charcol predict that the base rate will fall to 5% by the middle of this year, with two 0.25% interest rate cuts expected in the first half of the year. Officials have also predicted that over the course of the year property prices will fall by around 2%.
A spokesperson from John Charcol stated: “Further strong co-ordinated action from the main central banks will also be needed to pump money into the system, over and above what has already been announced. With the base rate/LIBOR spread at around 1%, monetary policy is in practice far tighter than was deemed necessary in the Bank of England’s August Quarterly Inflation Report and since that point the UK and global, economic situation has deteriorated rapidly.”
He also said: “A lot will depend on how the liquidity squeeze develops and so far the actions of the Bank of England do not instill much confidence, although it is difficult to judge how much its strings are being pulled by the government.”
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