Rate freeze buoys property market

The Bank of England’s decision to keep base rates on hold at 0.50% for the eighth successive month, will benefit residential homeowners and property investors alike, and help increase demand for property in the UK.

The Bank has decided to extend its quantitative easing programme by £25 billion to £200 billion. The move was anticipated, given the unexpected contraction of third quarter GDP figure by -0.4%.

James Thomas, head of residential development and investment at Jones Lang LaSalle, commented: “Current market data suggests that the recent pick-up in house prices is likely to continue. House prices have now increased to levels higher than a year ago for the first time in 19 months. Nationwide reported that house prices in October were 2% higher than the same month last year, with house prices now averaging at £162,038.”

He added: “More positively, according to the Bank of England, mortgage approvals rose to the highest level since March 2008 rising by 3,000 in September to 56,000. Although this is still much lower than the monthly average level of 95,000 recorded between 1993 and 2008, the increase is a positive sign which supports the recovery in the housing market.” 

Stuart Law, chief executive of Assetz, said: “It is no surprise that the Bank of England has decided to hold base rates again at the historically low 0.5%. These rates are a good sign for residential homeowners and property investors alike. However, for potential investors and homeowners to take full advantage of the low rates, lenders must ease the restrictions on their lending criteria to help more people join or move up the property ladder.”

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