NAEA criticises rate cut

05-Mar-2009

Today's 0.5 per cent cut in the Bank of England base rate will make "no difference" to liquidity in the mortgage market, according to the National Association of Estate Agents (NAEA).

Gary Smith, the property industry body's vice president, called for a focus on improving liquidity in the market rather than taking the base rate down to zero per cent.

Despite low house prices, some first-time buyer mortgage hunters are struggling to secure finance because of the stricter affordability criteria put in place by lenders amid the uncertain economic climate.

At a time when many prospective property buyers could be saving up for their deposits, Mr Smith argued that base rate cuts have done little to boost the confidence of savers or allow banks to increase their lending.

"It has in fact done nothing to improve fluidity in the housing market," he said. "What we need is an increase in the number of mortgages available at sensible rates with limited deposits."

Persistent problems in the international credit markets and falls in consumer spending and business investment were among the reasons cited by the Bank for today's base rate cut.

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