Conveyancing Association response to Bank of England Inflation Report

In response to comments made today by the Governor of the Bank of England and publication of the Inflation Report, Eddie Goldsmith Chairman of the Conveyancing Association said:

“The Governor’s comments today suggests that we are unlikely to see any rate rises until the end of 2015, perhaps not even until 2016. There is still a concern that home-owners across the UK have grown dangerously accustomed to low interest rates, and any sudden rate rise compounded with the tougher mortgage rules and increasing economic uncertainty abroad, could have a serious impact.

“I welcome the fact that the Governor has recognised this potential danger of raising interest rates too quickly. While rates are to go up, I’m pleased that the Bank is opting for an increasingly cautious approach which will see rates rise more slowly and over a longer period of time. It’s absolutely the right approach, despite inflation falling, wages still need to catch up with the cost of living and holding the key rate for the time being will ensure that the housing market remains on an even keel.

“We must also be mindful that a rise in interest rates, whenever it comes, will inevitably hit first-time buyers the hardest. In a world of higher rates they are going to have to lean even more on their parents to help them raise enough money to put down a deposit. This is going to be especially problematic for those situated in London and the South East.”