Although borrowers and builders were hoping for another cut in interest rates, the Bank of England, as many analysts predicted, held the base rate at 5 percent on Thursday.
The Monetary Policy Committee (MPC) would have been under pressure due to falling house prices and low consumer confidence but decided to maintain the current figure after cutting interest rates three times in the last six months.
This appears to be a cautious approach with an eye on controlling inflation compared with the United States, where the central bank cut rates to 2 percent in an attempt to stimulate the economy and the housing market.
The pound is also currently weak against the Euro.
The Bank’s decision will be a disappointment to the HBF which had called on the Monetary Policy Committee to cut interest rates by at least half a percentage point to help prevent the housing market downturn impacting on the wider economy.
It hoped a cut, allied to the £50Bn ‘special liquidity scheme’ package announced last month by the Bank of England, and additional measures from the Government such as a stamp duty holiday would help restore both lender and buyer confidence and get some fluidity back in to the housing market.
Stewart Baseley, Executive Chairman of HBF said: “We believe more immediate action is needed to reduce the impact of a potential housing market downturn on the wider economy and on the Government’s ambitious housing targets.”
