Rate cut tip falls to two

A new poll has revealed a downgraded expectation for interest rate cuts in the UK during the coming months, which may limit the increase in the affordability of mortgages.

The survey of economists by Reuters has found that 53 out of 54 believe the base rate will be cut by 0.25 per cent by June this year, with the majority expecting a second fall to 4.75 per cent by September, where the base rate will remain until March 2009.

However, this is less than the 4.5 per cent figure the markets had expected until the Bank of England inflation report this week, which had stated that such a reduction would leave the door open to inflation breaching its target range by topping three per cent.

The limitation this may place on mortgage cost reduction may tempt some to consider self build as a cheaper alternative.


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