Property experts have welcomed the interest rate freeze as good news for the housing market.
David Bexon, managing director of SmartNewHomes.com, says: “The Bank of England’s announcement today that interest rates will be held at 5.25% will send waves of relief across the housing market.
“The average price of a new home fell 1.4% last month as buyers remain cautious following the series of rises experienced towards the end of the 2006 and into 2007.
“Despite rumours of another likely rise in the first half of this year, I would now like to see a period when rates are held, or even reduced to reinstate consumer confidence in the housing market.”
Stuart Law, managing director of Assetz, says: “The Bank has made absolutely the right decision in maintaining interest rates today.
“Inflation is currently under control is expected to come down sharply towards the end of the year.
“Wage demands seem to be under control and I expect to see wage increases
contained at below 4% per annum by the end of the bargaining season.
“The property market is robust and experiencing moderate growth in most
areas, but this has nothing to do with interest rates and everything to do
with lack of supply.
“Assetz believes that interest rates will peak at 5.25% and within 12 months
will be back to 5%.”
Robert Bryant-Pearson, chief executive of Allied Surveyors, says: “The Bank of England’s announcement today to hold interest rates at 5.25% was a sensible decision at this time.
“Another rise now could have led to a severe increase in repossessions, with more people struggling to make their monthly mortgage repayments.
“Although rates have been low historically, the ratio of mortgage debt to household income is extremely high, and as a result, only a small increase in rates could have had a devastating effect on family income.
“The interest rate rises announced during the final months of 2006, accompanied by the shock rise in January, pushed more homeowners into unmanageable levels of debt.
“Another rise at this time could have impacted negatively on the market, with homeowners still remaining cautious, many unwilling to move up the ladder and take on additional debt at this uncertain time.”
Paul Smith, chief executive of haart estate agents, says: “The market has only just recovered from January’s shock rise so a decision to raise it further would have had a serious impact on the housing market.
“House prices have stabilised and buyers have sensibly become wary about over-stretching their borrowing capacity.
“Holding the interest rates will help to reinstate consumer confidence and is particularly good news for first-time buyers who are already struggling to get on the property ladder.”
Nicholas Leeming, director of propertyfinder.com, says: “Homeowners will breathe a huge sigh of relief today.
“Mortgage rates are already up sharply over the last year and confidence in the outlook for house prices has begun to slip.
“We think enough has been done to slow the housing market and that a cooler picture will emerge over the coming months.”