Predictions from mortgage broker
January 3, 2008
Officials from leading mortgage broker firm John Charcol have made predictions with regards to both interest rate movement and house price movement for the coming year. This comes as many other industry experts put forward views with regards to how the housing market will perform, and how the Bank of England will react to the current economic climate in terms of making changes to the base rate, having already cut the base rate once at the beginning of December.
The general consensus seems to be that interest rates will fall two or three times over the course of the coming year, and that house prices will continue to fall, although there is unlikely to be a rapid decline in house prices. John Charcol has predicted that by the middle of 2008 the interest rate will have been cut to 5%, and over the course of the coming year property prices will fall by around 2%. Senior officials from the mortgage firm state that further interest rate cuts early in the year are necessary to have maximum impact.
One official from the firm 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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