First Rate Drop Since 2005 Marks Turning Point For Market     06 Dec 07



The Bank of England finally reduced interest rates today, for the first time since August 2005. The base rate dropped by a quarter percentage point to 5.5% in a move that is heartily welcomed by the National Association of Estate Agents (NAEA).

Peter Bolton King, Chief Executive at the NAEA, comments: "This is just what the market needed. There has been considerable doom and gloom lately as we have had to endure the fallout from some significant national and international events. This latest rate decrease will at least go some way towards repairing the damage done. I'm hopeful this will be the turning point in consumer confidence that will set the market back on track again.

"The rate drop will be especially good news for those who are coming off fixed rate mortgages shortly. Similarly, first time buyers will benefit as the lower rates help to reduce the burden of costs currently carried by those purchasing their first home."

CML comments 

Michael Coogan, CML Director General, commented: "A reduction in interest rates is exactly what the market needs and will benefit consumers. This will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates in the next year.

"However, we still need the authorities to intervene more aggressively to open wholesale funding markets. There is a real need to minimise the shortfall between the demand for mortgages and lenders' capacity to supply them."