Today’s interest rate cut has been welcomed by the Royal Institution of Chartered Surveyors (RICS).
Commenting on the decision, RICS West Head of Public Policy and Communications, Debbie Walsh said:
“Households and businesses in the South West will take some comfort from today’s bold move by the Bank of England, which is a much needed response to the dramatically worsening conditions across the whole economy.
“Consumer spending is expected to remain subdued throughout 2009, with house prices continuing to fall despite the sharp drop in the cost of money, leaving first time buyers very much on the sidelines.
“With the threat of repossession likely to rise significantly over the next year, as unemployment rises, measures such as yesterday’s announcement to provide Government guarantees for mortgage interest payments for home owners across the South West are absolutely vital.
“Giving people a six month buffer before repossession proceedings start, and a potential interest payment holiday for up to two years, should help prevent the serious distress caused by forced sales. Limiting the amount of distress selling will also restrict the amount of new property flooding the market, which in turn should provide some measure of support for the flagging house market.
“Further significant job losses are likely to be announced in the run up to Christmas and into the first half of 2009, putting pressure on the Bank to cut rates further. We expect rates to fall to 1% by the end of Q1 2009.”