NAEA and CML welcome interest rate reduction

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by Kay Murchie

The Bank of England bowed to immense pressure to cut interest rates yesterday from 5.75% to 5.5%, a move which has been welcomed by many homeowners.

Furthermore, the National Association of Estate Agents (NAEA) and the Council of Mortgage Lenders (CML) have welcomed the move.

Peter Bolton King of the NAEA said the interest rate reduction was just what the market needed. There has been significant doom and gloom recently and a dent in consumer confidence. However, yesterday’s rate reduction should go some way towards repairing the damage caused.

Mr King added that the rate reduction will be particularly good news for those whose fixed-rate mortgages expire in the next few months.

Michael Coogan of the CML echoed Mr King’s comments and said the reduction will reduce the risk of payment shock for the 1.4 million borrowers coming off fixed rates.

Mr Coogan concluded that the authorities still need to step in to open wholesale funding markets. There is a need to minimise the shortfall between the demand for mortgages and lenders’ capacity to supply them.