Rate cut would imbue industry with renewed confidence

Published: February 06, 2008

With the Bank of England set to announce its latest base rate decision for the month ahead tomorrow (February 7th), many industry analysts feel that a rate cut is on the cards - potentially leading to improved terms for mortgage holders.

The bank's Monetary Policy Committee voted 8-1 to hold rates steady in January, but Galliford Try Homes' managing director, Chris Coates, explained a February cut would not only relieve financial pressure on mortgage holders, but also encourage more first-time buyers to the market.

"While the housing market is set for a recovery, an imminent rate cut is needed to increase consumer confidence and property sales," he noted.

"The general feeling is that interest rates are on their way down this year and by initiating a cut now, homebuyers and industry will move forward in 2008 with renewed confidence."

Last week, the American Federal Reserve cut interest rates from 3.5 to three per cent, following a 0.75 per cent cut earlier in the month, amid fears of a recession.

A number of financial institutions, including RBS, Lloyds TSB, Barclays and Capital Economics, expect the Bank to cut rates by a quarter percent tomorrow.