Interest rates not set to double

The Council of Mortgage Lenders has attacked media reports misrepresenting its views on the future of the housing market.

12:20 24 May 2004

The Council of Mortgage Lenders has attacked media reports misrepresenting its views on the future of the housing market and future levels of interest rates.

Many investors felt the information that materialised over the weekend was conflicting and confusing - yet the CML have slammed the misrepresentation of its views.

Contrary to reports, the CML director general did not give an interview to the Sunday Telegraph, let alone one suggesting that interest rates need to double or are likely to double.

The CML Director General, Michael Coogan, said: "Our forecasts article observed that if the MPC specifically decided to target house price inflation and bring it down to single digits immediately, then interest rates would need to double."

However, he said that these comments were only ever a "hypothetical observation" which they neither wanted to occur nor believed would.

Mr Coogan said the story had "spun out of control - and it is now time for it to stop."

The CML has underlined its belief that base rates are likely to end the year at around 5.25 per cent and end next year at around 5.5 per cent. In its opinion house price inflation is likely to end this year at around 14 per cent, and next year at around eight per cent.

The bottom line for Mr Coogan was a concern for investors: "Real people make real financial decisions based on what they read and hear in the media - we want to make quite clear that they should be expecting a moderate rise in rates, not a doubling."