Bank of England grants homeowners a reprieve
by Gill Montia
Homeowners will be welcoming the reprieve granted by the Bank of England’s Monetary Policy Committee yesterday, when it opted to not to increase the base rate from 5.75%.
The MPC’s decision would have been influenced by house price inflation and although the latest data from the Halifax shows a 0.7% rise in house prices in July, this was the fourth consecutive month in which prices grew by less than 1%.
The increase for June stood at 0.4%, up from the May figure of 0.2% and the July rise takes the annual rate of increase to 11.2%, up from 10.7% in June.
The trend is backed by mortgage approval figures from the Bank of England and Royal Institution of Chartered Surveyors. Between April and June 2007 these fell by 8%.
At the same time the level of interest from first time buyers seeking a property declined in June, for the seventh successive month.
Capital Economics, the leading economic consultancy, takes the view that house price growth to be down at around 5% year-on-year by the end of 2007.
Economists are still predicting that interest rates will see 6% by the turn of the year because inflation in the manufacturing sector is running high and evidence of a slow down in consumer spending is far from conclusive.
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