Falling house prices and the need for a base rate cut were key topics in the midweek press and moved away from the financial supplements and on to headline pages. The front page of the Times demanded a rate cut as property prices suffered their sharpest fall since the early 1990s. This week, Halifax reported that house prices have fallen by 2.5% over the past year, with the average house now valued at £191,556. The Bank of England is now under intense pressure to cut the base rate and leading economists predict a cut of 0.25 percentage points, to 5 per cent.
The Daily Mail’s front page story was concerned about banks not passing on the benefits of interest rate cuts to their customers. Accordingly, the aftermath of the US sub-prime mortgage is still proving expensive to UK banks and that worse is yet to come. On a more positive note, the Daily Express had an article on how first-time buyers can benefit from falling house prices, as it gives them an increase chance of getting on the property ladder.
Elsewhere, the Financial Times looked at HSBC’s new proposal to match homeowners’ existing deals. The UK’s biggest bank, which has just 3 per cent of the market, is targeting the 1.4m customers who come off cheap fixed-rate deals this year to face a sharp rise in mortgage costs. It will offer to match homeowners’ existing fixed-rate deals- including rates as low as 4.54pc- for a further two years. However, the offer is only available for a five-week period and substantial set-up fees may be likely.