Bank holds rates despite sign of fall in house prices |
The Bank of England kept interest rates on hold at 5.25 per cent yesterday despite new figures showing that house prices fell last month.
The average house price fell 0.3 per cent in February to £196,649, according to Halifax, Britain's biggest mortgage lender. This cut the annual rate of house price inflation from 4.5 per cent to 4.2 per cent, the lowest rate of growth since October 2005.
Halifax forecasts that house prices will stabilize this year. Martin Ellis, its chief economist, said: “While the housing market has slowed over the past six months, it is supported by sound economic fundamentals. Interest rate cuts by the Bank of England are also helping to underpin house prices.”
Halifax says that it expects the Bank to cut interest rates twice more this year.
However, some experts predict that tightening of lending criteria by mortgage lenders could exacerbate the slide in prices. Banks and building societies, which are finding it increasingly difficult to secure funding for new mortgages in the wake of the credit crunch, have become much more careful about home loan deals.
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Added on 25/03/2008 22:21:56
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