House price figures released record biggest fall for 10 years
These figures, combined with weak retail sales, means base rate next week is likely to freeze for 8th consecutive month
David Bitner, head of mortgages for Bradford & Bingley, says: "Nationwide's monthly house price figures, released today, shows that prices fell by a seasonally adjusted 0.6% in March — the largest month-on-month decline since June 1995. This certainly indicates a damping down of the housing market and a slowing of house price inflation. Indeed the drop in prices in March took the annual rate of house price inflation to just 7.9% - the lowest rate since June 2001. While people should be wary about drawing too many conclusions from one month's data and combining the regional picture with the national one, which remains mixed, the MPC will undoubtedly be looking at the subdued figures closely.
"Indeed it is extremely unlikely that the MPC will vote in favour of a base rate rise next week. While the BBA reported an increase in gross mortgage lending in February (£11.9bn), 3% higher than in January, it is still 12% lower than February 2004 and growth in overall net consumer credit weakened in February.
"Gloomy retail figures further suggest that base rate will be held steady. The CBI report confirmed another weak month on the High Street with retailers saying sales were the worst for 13 years. While the report doesn't include the Easter break, traditionally a strong weekend, it does suggest that the consumer slowdown is persisting. There is little pressure, therefore, for the MPC to further restrict activity at this time.
"While a rise in the future cannot be discounted, it now seems very unlikely that base rate will be increased before the general election."
