I'm looking for a place myself at the moment and it is true that I cannot afford to live exactly where I want to live - But thats surely the whole point! Unfortunately not everyone can afford to live in the "best" parts of London or whichever town you're in. The compromise is in location or condition or size - you can buy a nice house/flat but then you have to travel longer into work etc.
lets not make quite such a fuss about it Fabio - learn to compromise

Matt, London,

As an estate agent I have seen people borrow ridiculus amounts of money and there needs to be a return to earnings to borrowing. Also the housing market is a market and it must be remembered that prices can go up as well as down.

muzzler, London,

The actual cost in administration within the economy for the alteration of interest rates must be astronomic to all concerned,certainly,not justifying 1/4% changes.

derek bevan, huntingdon/cambs, England/UK

As always it is the consumer that suffers. I cannot see how pushing up the interest rate slows inflation. Apart from anything else, it just fuels costs for the millions of us who own homes; what are we supposed to do, move into the street and sell our homes to people who can't afford them either?

The problem lays in an over availability of general credit and already over inflated house prices. House price inflation only benefits those who are trading down, the fat cats who have money to invest in property to make even more money or the estates of those who die. For the rest of us who have to live somewhere, the continuing increase in house prices is all relative - paper money - while for those at the bottom end who have to start somewhere, it is impossible.

But then I guess all of the above is about the capitalist system under which we sadly live or should I say exist. Constant worry for millions takes away a real quality of life.

edwardingle, chesham,

That correction would leave a lot of people in negative equaity- especially considering how many have to take out 95-100% loan-to-value mortgages in order to get their place on the ladder.
This is essentially why the government, and no other major party is interested in solving the problem- current homeowners will vote out any party that loses them their home- as we saw in '97

jb500, HD1, UK

Well done, MPC! Keep it up!

Michele, Richmond,

About time too.

Cheap credit = extortionate property prices, people glowing in the rays of their ever increasing property values should realise that paper wealth is just that, it can't be spent without either becoming homeless, borrowing against it, or dying.

All three options are not without tears, lets get back to sensible credit arrangments, give the youth of today a chance, not a future of ever increasing repayments for the sake of a roof over their heads, there must be a better way.

Prudence, Durham,

Justice? Wake up. What about non-first time buyers, why should they be penalised by loosing the equity value in their homes? Remember, for there to be a severe correction in the property market (not a slowdown - which I agree will happen) many more elements of the economy will need to correct too, stock market etc. So for all of you "Renters" out there waiting for this property crash so that you can pick up cheap property just remember, if there is a severe correction in the market - everyone is affected, everyone, not just homeowners - so chances are, unless you have a few million stashed away (in which case you wouldn't be speculating on a property market crash anyway) you probably won't be able to get a mortgage to fund your new cheap property, and will therefore continue to rent from homeowners.

KBS, London, UK

I'm not sure what you mean, James. If the purchase price is low, even high interest rates are easy to swallow. The only people to suffer will be those who borrowed what they could not afford.

There has to be - and will be - a correction in order to peg inflation. We have the highest inflation rates for 16 years. People appear to have forgotten how dangerous inflation was in the 70s and 80s.

Jo, Cambridgeshire, UK

People have the choice to borrow or not, borrow to much and can't afford the repayments.........tuff.

Shane, blackburn, lancs

Fabio, Exactly how is justice served when I as a first time buyer scrimped, saved and did without for years to afford my downpayment AND THEN the value of my property is cut to accomodate these poor 'downtrodden first time buyers' as you demand.
I managed to get on the housing ladder with zero help (and a lot of hindrance from the state) - I dont see why either my taxes or my property should be messed about with when I managed it.

Geo, Glasgow,

what a load of rubbish.

the problem with the housing market is one of supply....interest rates do determine the prices of property, but this will always remain out of the reach of 1st time buyers - except those who receive assitance from relatives...

steve h, london, UK

Which first time buyers, Fabio? A correction could hurt as many as it helps. As someone who in the next couple of months could be buying I could be hurt either way! Wait and see them rise whilst spending dead end rent, or buy and hope they don't crash whilst spending inflated mortgage..

Rich, Reading,

The rate rises are indeed bad news for lenders, but for every person with a mortgage there are 2 or 3 with savings and at least an equal number living partly on interest or pension annuities, all of which will now rise.

TONY, birmingham, uk

Agreed - there must be a correction soon in these over inflated property prices to enable first time buyers to get on the market. Much of the property shortage has been created by the greed of buy to let landlords owning several/many properties and those with second/third homes, thus restricting supply. I would like to know why GB has not plugged the hole re tax relief on mortgage interest that such landlords enjoy to the detriment of the rest of home owners?
Its time for the Government to act soon before we are all living in a polarised society with the rich "gated off" from the rest of us ordinary beings!

Clive, Oxford,

I agree with Stan in Australia - there are many ways for a government to intervene to control inflation. Relying on the Bank of England to inch up interest rates is a very blunt way to deal with the problem. Why not reform taxation so that property becomes equally attractive to equities and savings rather than the sem-tax loophole it is at the moment? Why not regulate lenders more so that monster mortgages aren't permitted or only permitted at punitive rates?
There are all kinds of ways to dampen the housing boom and mitigate its inflationary effects - raising rates is taking far too long to slow the market and when it does it will hurt recent buyers the most.

MB, Edinburgh,

James,
I wish:
> an end to the easy money
> an end to foreigners bidding up house prices in my neighborood "because you can BTL with no money down. It s all paid for by the bank!"
> an end to the proliferation of parasite estate agents that lie for a living
> a return to normal life, and normal interest rates i.e. between 6 and 8%, as per their historical average
> the ability to people to buy a decent annuity when they retire

You be careful what to wish for: rampant inflation, do not give a d... about people who honestly work, saves and wants to build a responsible financial future

Michele, Richmond,

Problem is the MPC, like most analysts, simply read the statistics, not what's behind them.

Chippy, Bristol,

Fabio C - be careful what you wish for.

James, London, UK

For justice be served and sanity be recovered, there must be a correction in the housing market. Anything else short of that will only penalise the first time buyer.

Fabio C, London, UK

Mr Brown can do a great deal to check inflation - by reducing government spending. Monetary policy is a blunt instrument and it hurts the average person the hardest.
In Australia, the government is running healthy surpluses and controlling its spending and the base rate here is 6.25% with inflation under control.

Stan Coveney, Sydney, Australia