13 Feb

House prices 'could fall'

House prices 'could fall'

UK house prices are likely to fall in 2008, as overall spending decreases, the governor of the Bank of England Mervyn King has said.

During the press conference to announce the latest inflation report, Mr King noted that the rates of people's savings will have to increase as the British economy slows down, reports Forbes.

And the official claimed that he is not surprised mortgage lenders have dropped their rates to the same extent that the bank has because rates were not increased when the base rate went up.

He also argued that affordability could be improved for homeowners in the coming months, despite the fact that prices will stabilise.

In its report, the bank claimed that further cuts to the interest rate may not be possible because inflation could be about to rise.

Mr King remarked that this may lead to a "tough balancing act" on behalf of the bank.ADNFCR-1222-ID-18466273-ADNFCR

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