HSBC sees possible new boom for property

03 November 2004
The property market could be reignited if the Bank of England lowers the rate of borrowing, HSBC has said.

The Bank has cooled the market by increasing the rate of borrowing costs five times since last November, but a weakening market could see interest rates lowered again.

"Britons are price sensitive and you certainly see that in the retail sales data. I think the same applies to mortgages. If you offer people cheap mortgages, they'll take it," said HSBC economist John Butler.

"There is a risk that this might lead to reacceleration in the housing market. In the past couple of years, the housing market probably had about six boosts.

"Whenever people expected it to be slowing, it bounced back," he said.

The Bank of England announces its decision at 12:00 GMT tomorrow, as to whether it will increase, decrease or hold the basic rate of borrowing for November.

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