Conveyancing Association respond to Bank of England Inflation Report
The Bank of England has released their quarterly Inflation Report revealing that interest rates are unlikely to rise in the remainder of 2014, however will increase gradually over the next few years.
Eddie Goldsmith, Chairman of the Conveyancing Association has commented on the Report in response to the interest rate announcements:
“The announcement today suggests that home-owners can breathe slightly easier about a rate rise this year. Despite a concern in some quarters that there is a dangerous reliance on low interest rates, a sudden rate rise compounded with the new tougher mortgage rules could have a serious consequences for the market.
I welcome the fact that the Governor has recognised this potential danger with his announcement today; that while rates are likely to go up, the Bank favours a limited and gradual approach which will see rates increase incrementally over a longer period of time. It’s absolutely the right approach, in my view there’s little evidence to suggest that the UK housing market is a bubble about to burst, there’s still slack in the economy and wages remain weak – holding the key rate for the rest of the year will ensure that the market remains buoyant.
My one concern is that a rise in interest rates, whenever it comes, will inevitably hit first time buyers the hardest. In a world of higher rates they are going to have to lean even more on their parents to help them raise enough money to put down a deposit. This is going to be especially problematic for those situated in London and the South East.”
The Report also highlighted house prices have risen by on average, just under 1% a month since the last report in May and stated ‘secondary market supply has picked up while new buyer enquiries have softened, suggesting a closer alignment of supply and demand.’
To read the report click here: http://www.bankofengland.co.uk/publications/Pages/inflationreport/2014/ir1403.aspx