The Bank of England’s decision to freeze interest rates at 5.25% will deal another blow to borrowers, claim firms across the mortgage industry.
Many brokers and estate agencies believe the Monetary Policy Committee needs to cut base rate next month to alleviate problems now affecting consumers.
Jonathan Cornell, managing director at Hamptons International Mortgages, says: “With inflation forecast to rise above 3% by the end of the year, it seems the MPC has remained true to its word and, at the risk of economic slowdown, is ensuring that maintained inflation remains its primary concern.”
He adds: “Such a decision will come as another blow to struggling mortgage borrowers.
“The two rate decreases since December have done little to alleviate the increases in mortgage repayments and today’s decision comes at a time when certain major lenders have actually increased the interest on their top line rates.
“With next week’s budget looming, today’s decision is unlikely to enhance optimism about what lies ahead for homeowners next week.”
David Newnes, managing director of Your Move estate agents, says: “The recent rate cuts haven’t been enough to alleviate the pressure on banks – and it’s consumers who are suffering.
“We need one more cut to tip the balance. The last two cuts have not been passed onto the borrower yet. A third would have allowed banks to put the borrower first.”
Eamonn Rice, chief executive of Mform.co.uk, says: “The bank’s failure to cut has just delayed the inevitable and increased the probability that a bigger reduction will be needed soon.
“We believe there should have been a 0.25% reduction.”
He adds: “It is clear that the credit crunch is having a meaningful impact on consumer spending and that this will increase as borrowers look to remortgage throughout the year. We estimate between 40,000 and 60,000 borrowers will be remortgaging every month between now and August.”
Steven Marks, lending executive at Newcastle, says: “The committee has the difficult task of balancing the slowing housing market with rising energy and food costs, and our current feeling is that they will wait for a few months to see whether a more settled picture emerges.”
He adds: “It is, however, encouraging that a number of large housebuilders and estate agents have confirmed in recent weeks that viewing activity is increasing, which may be an early sign that the housing market has reached its lowest point.”