Prospective buyers hit by new interest rate predictions

08 2008
Prospective first-time buyers are unlikely to benefit from a cut to the base rate of interest this year, the chief economist at The Royal Bank of Scotland has warned.

With the Bank of England's monetary policy committee scheduled to decide what to do with interest rates when it meets this week, a majority of observers have already expressed their belief that, as with last month, a freeze at five per cent is due to be the outcome.

Ross Walker concurs, explaining: "I think the MPC is stuck like the proverbial rabbit in the head lights: it can't raise rates because the real economy is weakening very sharply; and it can't cut rates because inflation is going higher. So when in doubt, do nothing until you're certain that a move is definitively in the right direction."

This will mean that potential buyers have not seen rates cut since April, making it even more difficult for them to obtain a mortgage and meaning that renting will remain popular for some time yet. ADNFCR-1219-ID-18674639-ADNFCR

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