BSA: Base rate reductions may do damage

Posted: 03 Feb 2009 09:01:17 GMT

Lowering the Bank of England rates further this week could add harm to the housing market, the Building Societies' Association (BSA) has warned, ahead of the decision to adjust rates due on Thursday.

Lower interest rates have made mortgage payments far lower for tracker customers than they were just one year ago, and may have enticed some buyers into the market, but rates are already at historic lows, and further reductions could prevent other buyers saving for a mortgage deposit, the BSA has argued.

Adrian Coles, director general of the BSA, said: "The BSA's Property Tracker survey found that affording the monthly mortgage payments was considered a barrier to home purchase by 37 per cent of respondents in December, down from 70 per cent in June 2008 as interest rates fell.

"Mortgage availability, rather than the cost of mortgages, has become a more pressing issue over the last few months. This suggests that what is important to potential borrowers is maintaining the flow of mortgage."

The difficulties outlined by the comments suggest that selling a property will remain a lengthy process this year, as buyers face even more hurdles to ownership.

Homeowners in need of selling a property soon, however, could still make a quick sale by publishing a sales advert online.

Selling a property online could attract more buyers, which may in turn lead to offers being made sooner.



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