Builders praise interest rate cut
House builders have responded positively to the Bank of England’s decision to cut interest rates by 1.5 per cent.
The scale of the cut, which was announced by the bank’s monetary policy committee today, surprised commentators who were expecting a fall of around 0.5 per cent.
Jonathan Fair, chief executive of Homes for Scotland, said: ‘Lenders must be persuaded to pass this substantial reduction on at the earliest opportunity.
‘Home buyers and the housing industry can take heart from today’s announcement, the latest in a series of positive measures aimed at bringing stability back into the economy.’
The Royal Institution of Chartered Surveyors also backed the move. Chief economist Simon Rubinsohn said: ‘While the news flow in the near term on both the economy and the housing market will still be negative this dramatic step should provide important support for confidence.’
Earlier Halifax said it believes the housing market is showing signs of stabilising.
The bank’s October house price index shows prices fell 2.2 per cent for the month, and are down 13.7 per cent on a year ago.
But mortgage approvals remained stable at around 33,000 a month, and falling prices mean the house price to earnings ratio has dropped from 5.84 in July 2007 to 4.92 in August 2008.
Chief economist Martin Ellis said: ‘We expect a further improvement in ratio over the coming months.’
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