Rate cut predicted for 2008

Interest rates will fall to five per cent by the middle of 2008, according to independent mortgage broker John Charcol.

In news that may be welcomed by those looking to buy a house in Scotland in the new year, senior technical manager at the firm Ray Boulger predicts that the rate will be cut until it reaches five per cent and will not increase again during 2008.

It may, however, fall a little further, Mr Boulger states.

"A lot will depend on how the liquidity squeeze develops and so far the actions of the Bank of England don’t instil much confidence, although it is difficult to judge how much their strings are being pulled by the government," he concludes.

The Bank’s monetary policy committee elected to cut the official Bank Rate paid on commercial reserves by 0.25 percentage points to 5.5 per cent earlier this month, which may have also proved popular with those looking to buy a house in Scotland due to its likely effect on mortgage repayments.