Rates hold brings little joy for homebuyers

The Bank of England's Monetary Policy Committee left UK interest rates on hold last week at the historic low level of 0.5 per cent. This is the fourth month that the rate has been held and although there is a need to stimulate the economy, most commentators believe that interest rates will start to rise soon.

"The hold in the base rate does not come as a surprise, but as the economy creeps towards recovery the committee will need to increase interest rates to balance the risk of inflation," said Jennet Siebrits, head of residential research at real-estate firm CB Richard Ellis. "A rise in interest rates is unlikely to occur until the beginning of next year to allow the effects of the low interest rate environment and quantitative easing to filter through."

But those hoping to make the most of low rates and buy a property may be in for a nasty surprise according to another real estate firm. "We are not convinced that house prices have reached the bottom yet," said James Thomas from Jones Lang LaSalle. "There are still considerable headwinds for potential homebuyers. Mortgage finance is still very hard to come by and the weak economic fundamentals will continue to weigh on the housing market as unemployment rises."