Rate cut ''could happen this year'' - commercial mortgages

19 September 2007

Firms with commercial mortgages looking for a reinvigoration of the sector could find their investments boosted by a drop in interest rates before the end of the year, it has been suggested.

Already boosted slightly by yesterday''s news that inflation fell to 1.8 per cent in August, thus all but removing the chance of rates rising to six per cent, the real estate sector is likely to be further buoyed by today''s release of the minutes from this month''s Monetary Policy Committee (MPC) meeting.

The report shows that the bank voted 9-0 in favour of holding rates at 5.75 per cent for the second consecutive month, and with the Federal Reserve last night slashing rates for the first time in four years, some analysts believe a cut could now be on the cards for the UK.

"Our expectation is for a UK rate cut this year, probably in November," revealed the Centre for Economics and Business Research''s chief economist, Jonathan Said.

David Kern, economic advisor to the British Chambers of Commerce, has similarly called for a cut in rates to take place as soon as possible.