Interest rate hope given to homeowners

07-Apr-2008

Homeowners have been given some fresh hope with a prediction that cuts in interest rates could be imminent.

Economists have forecast that the Bank of England will cut the base rate by 0.25 per cent to five per cent this week in an attempt to appease the credit crisis and boost house prices.

If implemented, the move will place pressure on lenders to pass on cuts to borrowers, which could be welcome news for first-time buyers.

Howard Archer, chief economist at Global Insight, expects rates to stand at 4.25 per cent by the end of the year.

Commenting on the issue, Philip Shaw, chief economist at Investec Securities, said: "We consider that a June easing to 4.75 per cent is likely to follow this week's reduction."

Last week, Halifax increased interest rates for homebuyers with relatively small deposits in an unsettled week for the property market, which saw a 13 per cent reduction in the amount of mortgage products available.

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