Rics predicts reduction in cost of borrowing

03-Oct-2008

There will be a reduction in the cost of mortgage borrowing over time, the Royal Institution of Chartered Surveyors (Rics) believes.

It states that recent figures on house prices are not surprising, given the "turmoil" in the financial markets recently, but predicts that some composure will be regained.

"The recent increase in some mortgage rates and the continuing squeeze on the supply of loans suggests that further price falls are likely over the coming months," a spokesperson comments.

Rics also states that there is an "increasing probability" of a cut in the interest rate next week.

However, the body warns first-time buyers that the reduction in borrowing costs is unlikely to be of a "significant magnitude".

This week, figured from Nationwide revealed that the average house price now stands at £161,797, which represents an annual change of -12.4 per cent.

Prices have fallen for 11 consecutive months, although the institution points out that the monthly rate of fall has remained almost unchanged over the past three months.

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