Rate stability much needed

The National Association of Estate Agents (NAEA) has welcomed the Monetary Policy Committee’s decision to leave interest rates at 5.75% this month. Following a period of instability for the housing market, the Association warns that the Bank will need to consider future rate movements carefully if confidence in the market is to be restored.

Peter Bolton King, Chief Executive at the NAEA, comments: “The UK housing market has had to withstand a number of major events in the past 12 months. The effects of multiple interest rate rises, the introduction of home information packs and recent events on the worldwide economic stage have all contributed to a slowing in the market and a reduction in confidence. We are pleased that the Bank has chosen not to increase rates this month and hope that it will continue to at least maintain, if not reduce rates, over the remainder of the year. Confidence in the market is currently fragile and consumers and the industry alike would benefit from a clear indication that the future is positive.

“While September is usually a busy time for the housing market, we are getting reports from a number of regional markets that the month has been slower than usual – worryingly so in some cases. Agents are feeding back reduced activity and an uncertainty as to the direction of the market over the coming months. Meanwhile, many homeowners – particularly those who are now coming off fixed rate mortgage deals – have been facing the prospect of keeping up with increased monthly repayments. A period of stability in interest rates would at least allow time for the market and consumers to recover from recent events. A decrease could be just the confidence booster that everyone needs.”