Tuesday 4th December 2007
The Bank of Englands monetary policy committee (MPC) should lower the base rate of interest if it is to avoid adversely slowing the property market, it has been claimed.
Both the Council of Mortgage Lenders (CML) and independent broker John Charcol have highlighted the need for a rate reduction in recent days ahead of this weeks MPC decision.
Michael Coogan, director general of the CML, suggests that a fall in mortgage approvals of 4,000 from September to October could be down to seasonal effects.
However, he urges action from the government and policymakers to ensure there is no long-term downturn in the economy as a whole.
"We would like the government and the Bank of England to consider how best to unblock the funding logjam that some UK lenders are experiencing," he comments.
The recommendation is echoed by John Charcol, which notes that efforts by lenders to increase affordability for consumers could actually complicate matters.
Katie Tucker, technical manager at independent mortgage broker John Charcol, suggests professional advice to avoid confusion which could derive from new pricing schemes.
She highlights the need for swift action in light of the effects on UK credit which are still being felt from the US sub-prime lending crisis.
"The USs credit problems are strangling sub-prime lending here, making it more important than ever for the MPC take the opportunity to bring down the bank rate," she asserts.
Ms Tucker concludes that lenders with no illiquidity are still reluctant to extend their security to consumers as to do so would "bury them in business".
With continued tightened credit conditions, but Mr Coogans assertion that the slowing market could be due to seasonal effects, this weeks MPC decision might still not be a foregone conclusion.
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