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Experts react to Bank of England stimulus package

08 August 2016

As global markets weighed up the implications of the Bank of England rate cut and new quantitative easing programme in the wake of the EU referendum, experts cast their verdicts on the Monetary Policy Committee’s latest economic strategy. Here we look at some of the reactions. Property Market Ben Madden, managing director of London estate agents Thorgills – “The first rate cut for seven years can only be a positive for the UK property market. For many homeowners, their mortgage costs have just fallen even further. The property market has by no means imploded since the vote to leave the EU but the decision to cut rates further, and also print more money, should inject additional confidence into UK bricks and mortar.” “Alongside the underlying supply crisis, this could see house prices hold firm for the foreseeable future, particularly in areas outside prime central London. Long-term low interest rates have undoubtedly boosted demand in the property market, putting upward pressure on house prices. This new rate cut almost certainly won’t send prices up, but it could certainly help to stabilise them. Sadly, while homeowners and many in the property market will benefit, the Bank of England’s decision will hit savers hard once again.” Jonathan Hopper, managing director of the buying agents Garrington Property Finders – “While this is obviously welcome news for the housing market, it’s also worrying – how bad does the Bank of England think things will get? The rate cut should act to spur demand. With softening prices, increasing flexibility from sellers, and historically low mortgage rates, we’re firmly into a buyer’s market. The mortgage business is hardly brisk at the moment, so lenders may well seek to grab customers from each other by launching new products and offers as a result of the cut. In the context of the housing market, today’s interest rate decision is in reality just a sticking plaster which fails to solve a deeper underlying issue. With property transaction volumes all but drying up, what’s urgently required is direct government action to reduce the costs of moving.” Source

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