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Interest rates held at 0.5%

Thursday, 7 May 2009 12:54 PM

The Bank of England has confirmed interest rates are to be held at 0.5 per cent today, remaining at this level for the third consecutive month.

A further £50 billion will also be put into the economy through quantitative easing.

The Monetary Policy Committee (MPC) lowered interest rates to the historic all time low back in March.

Nick Hopkinson, director of Property Portfolio Rescue (PPR) said: "Interest rates are unlikely to move from 0.5 per cent for the foreseeable future, but with lenders remaining cautious, this will have little impact on those looking to secure a mortgage or raise finance.

"Consumers shouldn't be fooled by the ad hoc good news stories, which have been emerging over recent weeks. We are not nearing the bottom of the market - house prices still have a long way to fall, unemployment figures continue to rise and repossessions have almost doubled over the last year. Those delaying their house sale in anticipation of a change in fortunes and imminent price rises will be bitterly disappointed."

The property industry has reacted by calling for greater help with finance for those trying to get onto the property ladder, by making lending more available to first-time buyers. Keshav Thukaram, managing director of smartlandlord.co.uk said: "Interest rates are no longer the answer to kick starting the economy or the housing market.

"Instead it is a waiting game to see if quantitative easing and a dramatic Budget will spark demand. The picture is mildly optimistic in some areas - confidence is already returning to the housing market. But mortgage criteria remain restrictive, particularly for first-time buyers and landlords, who have the most reason to jump into a market nearing the bottom.

"Without these vital groups returning to the market it will take longer to put a floor under housing transactions and price falls. It is essential more is done to free up mortgage availability for less mainstream borrowers."

Nicholas Leeming, director of propertyfinder.com, agrees, saying, "first-time buyers especially are champing at the bit to take advantage of low house prices. A lack of mortgage availability is still holding them back."

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