House builder in interest rate appeal

Home builder Bovis has said house sales will fall by up to 20 per cent in 2008 unless there is a major cut in interest rates.

Chief executive officer Malcolm Harris told Sky News he believed the Bank of England's monetary policy committee (MPC) should reduce the rate from its present 5.25 per cent rate to 4.5 per cent.

However, few analysts expect the base rate to fall by this much, with more cautious predictions including that of the Royal Bank of Scotland.

Last week the Edinburgh-based institution forecast that there would only be one more rate reduction between now and 2009.

Concerns about inflationary pressures may restrict the scope the MPC has for rate-cutting this year, the Bank warned in its February inflation report.

The persistence of higher rates may prompt some to avoid large mortgage costs by self-building their homes.


© Adfero Ltd