Bank of England holds base rates at 5.75%

The Bank of England announced on Thursday 8 November that interest rates would be held at 5.75% for a fourth consecutive month. The last change in the base rate was an increase of 0.25% from 5.5% to 5.75% on 5 July 2007.

Some commentators had expected the Bank to reduce the base rate in view of the recent ‘credit crunch’, the ongoing uncertainty in the financial markets and the widely reported fall in property prices across the country.

The decision not to reduce the base rate was met with frustration by Peter Bolton King, Chief Executive of the National Association of Estate Agents (NAEA), who commented, “Consumers are crying out for reassurance. Many housing market reports clearly indicate that the housing market is slowing down on a monthly basis and agents have expressed concern."

Indeed, the Primelocation.com House Price Index in October revealed that average prices in London had fallen for the third consecutive month, down 0.8% in October 2007, while prices in the prime country market were also down 0.8% on September 2007.

Commenting on the implications for the prime property market, Ian Springett, Chief Executive of Primelocation.com, reports, “We are certainly expecting fewer transactions over the coming months and into next year, as rising property stock and increasing buyer caution conspire to cause average property prices to remain stagnant or to fall. However, contrary to some reports from the media, we see no evidence to suggest that anything like a ‘price-crash’ is on the horizon”.