Lime Legal
LocalGov

Lunchtime news 19/20 December 2007

20/12/2023

Posted by:
Emma Hawke

The prospect of a new cut in interest rates increased when the Bank of England’s monetary policy committee minutes were released. The minutes showed that all members of the committee unanimously voted to reduce the cost of borrowing earlier this month, when the BoE dropped rates by 0.25 per cent. They also discussed whether a larger reduction in rates might be necessary to cope with a slowing economy. Most experts expected at least two members of the committee to reject a reduction in rates. The next rate cut could come as soon as 10 January.

In America, permits for new home builds dropped 1.5 per cent to a 14-year low over November. The permits are seen as an indicator of the future health of the housing market. At the same time, single-family home starts, which account for the bulk of house building, fell for the eighth straight month, dropping by 5.4 per cent to a year-on-year total decrease of 24.2 per cent. Economists however believe that a fall in house supply, may stop prices from falling any further.

The world’s central banks have again had to bail out the financial markets with a £263 billion injection of funds this week – the biggest ever recorded. The European Central Bank alone lent over half a trillion dollars for two weeks at a rate of 4.21 percent, well below the market cost of short-term money. The Bank of England also auctioned off £10 billion on Tuesday, while the US Federal Reserve is planning to lend approximately £20 billion over two weeks. Analysts warn that further big injections will be unlikely to prevent any inflationary pressures.

The global credit crunch has spread to Japan, with the world’s second largest economy now teetering on the brink of a recession ‘bought about by government policy error’. GDP growth to March ‘08 expected to be just 1.3 per cent, down from 2.1 per cent, following the introduction of new building standard laws which are expected to lead to a 12.7 per cent fall in housing investment. Analysts fear the damage to the construction sector will be massive.

Mortgage rates could rise and the housing market slow down if high street banks are forced to hold more liquid assets in an attempt to avert a rerun of the Northern Rock debacle, the Financial Services Authority (FSA) said. The FSA is planning to develop new reporting requirements next year where banks and building societies will be required to provide a monthly analysis of their cash flow position. It has acknowledged that requiring banks and building societies to hold more liquid assets which carry a lower yield will divert resources away from the banks’ main business of lending and may increase costs.

And finally, a couple have had a convicted criminal move into their home against their wishes, after he gave their address to the court as his own. The couple say the first they knew about it was when Sims, a friend of their daughter, moved in, bringing with him a box ito enable the court to monitor his ankle tag. Sims appeared before magistrates last week where he was sentenced to a week’s curfew after breaching a supervision order. He gave the address after the couple’s daughter said he could stay with her family, and the Probation Service didn’t verify the address. The courts are looking into the situation, but the police say they cannot act with a court warrant.

Comments:

No comments have been made on this article yet.

Leave a comment



Enter the word you see below:

Housing Care and Support conference