Last November, The Economist reported that they expected two rate cuts in 2008 to bring the offical uk cash rates back to 5.25%.
"The Bank's latest forecasts are based on market assumptions that they will cut base rates by 25bp in the first quarter of next year. Indeed, financial markets are now expecting not just one 25bp cut around February 2008, but have also priced in a second cut around May 2008, which would bring official cash rates back to 5.25%."
Like the US, the UK economy has had hard times, and has seen their share of sub-prime mortagae troubles. According to agentcities.net, Chancellor of the Exchequer Alistair Darling has commited to work with the industry on 10, 20 and 25 year fixed rate mortgages.
"the support of the Government for shared equity schemes have helped 95,000 homeowners across the country, to acquire their property, especially after Labour took office"
Mortgage brokers think market conditions are getting worse, according to the Intermediary Mortgage Lenders Association (IMLA).
According to Telegraph.co.uk, the UK has recently seen it's worse housing price slide sine 1996 and consumers are concerned about negative equity.
"The average price of a home in April 2008, dropped 1pc from a year earlier, and by 1.1pc compared with march."
The Telegraph expects that this weakness in the housing market should add pressure to the Bank of England to reduce the UK libor interbank interest rates from their current 5pc level, already .25pc below what the Economist predicted at the end of 2007.
"David Blanchflower, one of the nine people at the central bank who votes on interest rates, warned yesterday that prices could tumble by as much as 30pc in the next two to three years and, that without a sharp reduction in rates, the UK economy risks a recession."
The BoE has cut interest rates 3 times in the past 5 months, but mortgage rates have actually risen by an average of around 1.25pc, no help to home owners watching their prices fall while interest rates are actually rising.
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