Lower rates 'attracting' buyers back to market

Posted: 13 Nov 2008 10:39:40 GMT

Last week's significant interest rate cut, the recent stamp duty revisions and falling property prices will conspire to attract more buyers back to the property market.

That is the claim of Michael O'Flynn, content editor at housing website FindaProperty.com, who said that an interest rate of three per cent would create "a feeding frenzy" in the property market during more regular times.

He explained that first-time buyers who have managed to save up a deposit are now in a solid position, and can realistically think about purchasing a new home, thanks to the factors listed above.

However, Mr O'Flynn warned that most lenders still lack confidence in the market, something that could hamper new buyers' chances of securing a property.

"Even if the banks pass on the cuts, they can still restrict the amount they lend by demanding higher deposits and charging higher arrangement fees et cetera, and it looks like they are still nervous about lending," he said.

Earlier this month, the Bank of England's monetary policy committee cut the base rate by 1.5 per cent, following on from the 0.5 per cent cut that was made during October. Analysts expect further rate cuts to be necessary before the economy corrects itself.

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