Press Release Summary: Today may have seemed like one of those non-event days, when any excitement and anticipation that existed before the Bank of England\'s monetary policy committee (MPC) delivered its interest rate verdict dissipated at midday when the announcement was made that there would be no change to the base rate.
Press Release Body: Today may have seemed like one of those non-event days, when any excitement and anticipation that existed before the Bank of England\'s monetary policy committee (MPC) delivered its interest rate verdict dissipated at midday when the announcement was made that there would be no change to the base rate.
In many ways it was a non-event. For one thing, changes in the base rate in successive months are very rare. The last time it happened was when the rate was raised in May and June 2004. The last successive cuts were in 2001.
Furthermore, the evidence of January suggests that the MPC is unwilling to make back-to-back reductions even when it is in a round of reductions. The committee followed up the unanimous vote for a reduction in December with an emphatic eight to one vote to hold in January. All eight who said no to a cut then backed one in February. On this basis, when the minutes are published on February 19th the vote will, if the pattern is continued, show a clear vote against a cut while still leaving a March trimming open.
That remains to be seen, while in the meantime the eight experts quizzed by Adfero last week who tipped a hold decision can be satisfied that their judgement was sound.
However, the prospects for UK mortgage interest rates coming down, including buy-to-let mortgages, may be more of a story than today\'s non-event was. Earlier today figures from the Royal Institution of Chartered Surveyors (Rics) showed that the situation for investors was a mixed one. On the downside, the survey showed that one per cent more surveyors recorded a fall in the number of new instructions than saw an increase, the first buy-to-let mortgage decrease since Rics began measuring this sector in 1998. Yet on the other hand, the number of tenancies were up, with 16 per cent more surveyors reporting a rise in these than reporting a fall. Demand was found to be particularly high, exceeding that of flats, in the family homes segment of the market, a situation which refeleted a problem of undersupply.
Commenting on the figures, Rics spokesman Barry Hall stated: \"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector.\"
Given the positive news which those who are able to invest are enjoying, the issue of interest rates and the ability to get mortgages is of greater importance. Of course, part of the mortgage issue is down to the sort of products lenders are willing to supply, a number which has dwindled after the credit crunch struck, but as much as falling interest rates can help these will be welcome.
While releasing its monthly house price figures today Halifax tipped that there will be two more interest rate cuts this year. While March may have been easy to rule out, many investors will be watching with interest to see if matters are different in April.
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