News

Market Update
The Governor of the Bank of England gave a speech yesterday, highlighting the intension for interest rates to start a slow recovery next year if the economy holds firm.
He said the ‘equilibrium’ rate of interest – the rate needed to keep the economy at its potential and inflation on target – will be lower than the historical average interest rate of 4.5 per cent.
Carney said: “It would not seem unreasonable to me to expect that once normalization begins, interest rate increases would proceed slowly and rise to a level in the medium term (5 to 10 years) that is perhaps about half as high as historical averages.
“In my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year.”
He said the increase in rates will not be “linear or pre-determined”.
Carney said the monetary policy committee will consider three major factors when deciding when and how to raise rates: the pace of economic activity, (still slow) household debt (still very high) and core inflation (still very low).
 “Given these considerations, the MPC will have to feel its way as it goes, monitoring a wide range of indicators and adjusting the pace and degree of Bank rate as it learns.
So no major shocks there, still a very good time to buy, with a long term assurance of low interest rates.
The Council of Mortgage Lenders –yesterday reported, it now expects gross lending to be £209bn this year, not the £222bn it originally predicted.
If the CML is correct, it would mean transactions will be virtually unchanged since last year.
While far better than the sub-million transaction levels in the years from 2008 to 2012, transactions are still running well below pre-crunch activity. In 2006, there were nearly 1.7m sales.
In the same breath, it was reported that rents across the UK are up 11.6% on last year. Why are people not buying you might ask?
We are seeing an upturn in viewings, but it is still hard to gain stock, people are simply not coming to the market. At the lower end we took on a house last Saturday and it was sold on Sunday and we are still receiving calls from people asking if they can be informed should the sale fall through!
The two ends of the same market!
Bill Reid BEM BA NAEA DipPFS
Reid Estates. 01738237337