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Interest rates held at 0.5 %

Thursday, 9 April 2009 2:02 PM

Interest rates have remained at 0.5 per cent, the Bank of England announced today.

In a widely expected move, this is the first time interest rates have not been lowered since October 2008, when they stood at five per cent.

Although the interest rate cut spells good news for lenders, the hold at 0.5 per cent is bad news for anyone trying to save.

David Bexon, managing director of SmartNewHomes.com, said: "A further interest rate cut today would have served little purpose for the nation's home buyers.

"HSBC's announcement yesterday will hopefully provide a stimulus for more banks to offer 90 per cent mortgages at competitive rates."

The FT house price index released earlier today suggested house prices were beginning to bottom out, and

James Hyman, partner for residential sales at Cluttons, said this is a good opportunity for first-time buyers to finally get a foot on the property ladder. He said: "First-time buyers or those who have come out of the market temporarily should look to jump back in sooner rather than later.

"The bottom of the market is close to being called and the cost of borrowing is only going to rise. This could be the last really good opportunity to take advantage of the downturn both in terms of affordable borrowing and property prices."

But Lee Bramzell, chief executive of portal PropertyIndex.com, explained this will only be possible if banks start lending again. He said: "Lend, lend, lend should be the call from every homeowner, not cut, cut, cut.

"Further rate cuts are irrelevant now, what the market needs is more deals from forward thinking lenders like HSBC who yesterday stuck their necks out to lend to first-timers buyers at decent rates and loan to values. Competition is healthy and is a far more important factor to get the housing market back on its feet again."

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