NAEA wants base rate reduction

Posted: 05 Mar 2008 10:50:54 GMT

Mortgage borrowers may be boosted by a cut to the base rate of interest, if the National Association of Estate Agents (NAEA) gets its way.

Mortgage borrowers may be boosted by a cut to the base rate of interest, if the National Association of Estate Agents (NAEA) gets its way.

The organisation is calling upon the Bank of England's Monetary Policy Committee (MPC) to announce a reduction in March.

Members of the MPC are meeting tomorrow in order to make a decision on the base rate, with most analysts forecasting no movement.

However, the NAEA believes that a reduction should be announced in order to help boost the UK's mortgage and housing markets.

"There is an ongoing lack of confidence in the housing market and the Bank of England needs to act fast to stop it stalling," explained NAEA chief executive Peter Bolton King.

"We are seeing people squeezed as a result of the credit crunch, as the banks expect bigger deposits and better credit ratings. In addition, nervous banks are keeping their interest rates well above the base rate.

"This means consumers, especially the vital first time buyers, are caught in a double trap of having to find a bigger deposit and fund higher payments against the backdrop of rising inflation," he added.

New Star recently forecast that the base rate would be cut by 0.25 percentage points in March, bring it down to five per cent.

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