David Austin, Managing Director of Property for Life,said:
“The Bank of England’s announcement that inflation will hit the targets for the forthcoming year is encouraging news for consumers. The way has now been left open for a reduction in the base rate early next year and we would welcome a decision to this effect.
“Although consumer spending is reported to have remained buoyant, the property market has become more subdued, with rising repossessions. Homeowners and property investors will be encouraged by the Bank’s signal that rates will shortly be on their way back down, relieving the recent pressure of increased repayments.
“Growing numbers of investors have been feeling the pinch of the higher interest rates for the past couple of months. Our recent survey revealed that over 80% predicting that, given the current climate, rates will decrease over the next 12 months. Confidence in the property market remains strong however, with 76 per cent of serious investors still certain that now is a good time to buy.”
Stuart Law, chief executive at Assetz, added::
“Finally the Bank of England has woken up to the very clear and present danger to the UK economy from the continuing effects of the credit crunch.
“Its decision to maintain interest rates at 5.75 per cent once again this month was greeted with much contempt from the industry, which is more than aware of the negative impact this is having on households across the country.
“I have previously predicted that interest rates will fall next year with three cuts a likely possibility. In fact, I would expect rates to first fall early in 2008, finishing at 5 per cent by next December.”
