Insurance News Archive

Rate cut on the way, say experts

The property market could be set for a fillip next week based on widespread predictions of another cut in the base rate.

An Adfero poll of analysts, economists, financial institutions and business organisations yielded a unanimous verdict ahead of next week's meeting of the monetary policy committee (MPC), with all 11 anticipating a cut.

Paul Dales, UK economist for Capital Economics, was among those expecting another dramatic cut to follow the 1.5 per cent reduction in November.

Mr Dales predicted a cut of 100 basis points, arguing the "weakness of the incoming data flow in terms of inflationary activity" as well as signals from the MPC were pointing towards swift action.

Others including Sebastian Howell, vice president of Morgan Stanley, were expecting a cut of more like 50 basis points, but the impact of the changing environment is clear.

Commercial and private borrowers looking to fund property purchases could find credit is more easily available, although the transmission of the rates to the high street could be a sticking point.

Nevertheless, with house prices coming down, those able to secure funds could find themselves with more opportunities to invest in bricks and mortar.

28 Nov 2008