Mortgage UK -> Articles -> Housing Price Dilemma

What is the Bank of England to do? The property market looks set to be on the brink of a comeback, and yet everyone seems to expect a cut on interest rates.

Could the Bank of England lower interest rates? There is talk that they might drop the rates by a quarter of percent from the current 4.5 percent.

The Monetary Policy Committee, the decision makers behind inflation and interest rates, will not want to repeat the housing boom, which they created back in the late 90’s.

Mortgage lenders reported an all time high in 2003 and are said to have reached that peak again even though housing prices, which remain at a record high, are still increasing.

Although we are unlikely to see a boom like that of the late 90’s in this current climate, the rate cut back in August looks to have satisfied its purpose of stabilising the economy.

It is possible that with the increase in mortgage approvals that we could see the percentage increase in housing prices rise to double figures. The Bank of England should have learned its lesson from last year and should react to changes sooner rather than later.

The financial camp is split on the predicted outcome of the interest rates later this year. Some say a cut in rates is due, others believe that we may follow a global trend and increase the rates.

The Governor of the Bank of England seems adamant that he does not want a repeat of the housing boom and is clearly against further lowering rates. He says that house prices are looking stable which is a satisfactory position and their aim should be to keep them that way.

High Street banks are watching the housing market very closely and have noticed a one and half percent rise in house prices in the month of January alone.