MPC minutes show no new support for rate rise

Nia Williams

March 23, 2011

Spencer Dale, Andrew Sentance and Martin Weale all voted for a rate rise as they did previously. Dale and Weale voted for a 0.25% rise while Sentance voted for a 0.50% rate rise. The final vote was 6:3 to keep rates at 0.5%.

Commenting, Nick Hopkinson, director of property company PPR Estates, said: “It’s no surprise to see that the same members of the MPC voted both for and against interest rate changes again this month.

“The interest rate setters are now really ‘stuck between a rock and a hard place’ with unemployment grinding ever upwards, austerity cuts starting to bite and inflation looming ever larger all at the same time. External events in the Middle East have driven petrol prices to record highs while the Japanese Earthquake/Tsunami and further worries around the Euro are just the kind of external shocks that could send UK plc back into recession.

“The UK housing market remains in a deep winter freeze with sales transaction levels running at around half the norm for this time of year. Obtaining a realistic/ affordable mortgage remains an unobtainable dream for all but the most affluent buyers.

“The lending banks have no appetite for mortgage lending and are still not really open for business as they struggle to salt away their losses from the credit crunch whilst paying out bumper bonuses. Sellers are still deluding themselves that their houses are going up in value so are not accepting realistic offers unless they are facing repossession. Many owners are hanging on to their homes today simply because of the low interest payments they are making at the moment.

“ Interest rates will have to go up sometime soon with inflation running away at the moment; many experts expect a rise in the next quarter. Any increase in interest rates will bring a lot of pain to the housing market as the truly precarious nature of many peoples’ finances is cruelly exposed.”

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