You are here: cherry > Press releases for June 2011 > Comments from Nick Hopkinson, Director of property company, PPR Estates, on today?s MPC interest rate decision

09 June 2011

?The Bank of England is clearly not going to be able to increase interest rates this year, even though inflation is running away from it. UK PLC is still very weak and any increase in borrowing costs would almost certainly tip the scales back into recession. Whilst keeping interest rates artificially low may be the easiest way of ?salting away? the huge national debts it is terrible news for savers and no real comfort for many thousands of struggling borrowers whose debt interest costs are typically circa-5% plus anyway these days. Ironically, it?s only high earners with huge deposits who don?t really need the money who can borrow competitively at the moment. ?The Government?s austerity cuts continue to bite, unemployment continues to move upwards and household incomes and cash-flows will continue to come under increasing pressure for the remainder of 2011. The house sale market has virtually ground to a halt this spring with transaction volumes falling back to the lowest levels seen since the credit crunch outside London recently. I therefore expect house prices to fall by 5% this year, even if base lending rates remain artificially low. If interest rates are forced up due to the MPC needing to retain credibility on its inflation management brief, then things will get a lot worse for many struggling sellers.? If you would like to speak to Nick, you can contact him on 07768 144497.

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