Bank of England holds base rate at 5.5% in January 08

On 10 January, the Bank of England announced that interest rates will be held at 5.5%. The decision came on the back of a slowdown in consumer spending and further signs of growing inflation. The decision is believed to have been a very close call and many industry experts believe that after this decision, an interest rate cut is now increasingly likely in February.

The decision will have disappointed many prospective homebuyers hoping to get a boost as they enter the property market in early January, with the number of mortgage approvals already some 37% down over the last 12 months. However, experts believe the impact of the credit crisis is beginning to ease, which in part has lessened the urgency of cutting the cost of borrowing immediately.

However, the latest data on the property market suggests prices are still struggling across the country. According to the latest Primelocation.com House Price Index, asking prices for prime property stalled across London, while in the prime country market, average property prices fell by 1.3% in December 2007.

Commenting on the prime property market, Ian Springett, Chief Executive of Primelocation.com, says, "The prevailing market conditions of dwindling buyer enquiries, limited new instructions and uncertainty about the future of property prices have resulted in a stagnation in asking prices and a heavy reduction in the volume of sales transactions. The question remains as to whether potential buyers are sitting tight to see what happens in the money markets, or whether they are merely holding out for further price falls before committing to buy. The latter may well lead to further price falls to come. The first three months of this year are likely to set the tone for the direction of the market in the year ahead".