Industry welcomes interest rate cut

Trade bodies have predicted “some respite” and the rebuilding of confidence following a 0.5% interest rate cut.

Six central banks – including the Bank of England – slashed interest rates this morning, bringing it down to 4.5% in England.

It was a move demanded by housing trade bodies including the Home Builders Federation, which had lobbied for a 1% cut.

The federation’s executive chairman Stewart Baseley said the cut was vital because the UK economy was dependent upon a healthy housing market.

Royal Institute of Chartered Surveyors chief economist Simon Rubinsohn predicted further cuts to the interest rate are to come.

“(The interest rate cut) should help to start the process of rebuilding confidence but we suspect that more action will be necessary over the coming months,” he said.

“Specifically in the UK we see base rates dropping to 3.5% by the middle of next year.

“Even allowing for this, at least two quarters of negative growth are likely and unemployment could climb from 1.7m to more than 2m.

“On the back of this, house prices are likely to continue slipping but homeowners should get some respite in the form of lower borrowing costs.”