Bank holds rates despite further signs that housing boom is over

For the first time in 2.5 years house prices drops 2 months in a row.

This month house prices tumbled by 0.5% after it tumbled 0.6% in the previous month.

However the Bank of England kept rates on hold at 5.75%

A report of Halifax showed that the annual rate of house price inflation dropping back into single figures, to 8.9% from 10.7% the previous month.

If the trend continuous, prices would fall in real terms over the coming year. The growth will be 1.2% per year and that is below the inflation.

The interest from new buyers in purchasing a house fell by 6%.

The recent oil prices, that peaked this weak for the first time over 98 dollar a barrel, highlights the nagging risk of a renewed burst of inflation.

Also the increases of other goods, such as food are reinforcing inflationary worries.

A majority of economist still believe that lower interest rates are coming for next year as an effect off a weakening US economy

Although Britain’s economy grew at a buoyant 3.3 % in the third quarter, inflation in September on the consumer prices index stood at only 1.8%.

Source

(Tom Van thienen)