In a recent speech a member of the Monetary Policy Committee, which votes to set the UK base interest rate, said that he believed the base rate needed to increase from its all time low of just 0.5 percent. Andrew Sentance has voted since June to have the base rate increased, believing that this is the only way to curb spiralling inflation.

However, the UK Housing Minister, Grant Shapps, has stated that it is necessary to keep interest rates low for as long as possible in order to ensure that homes are more affordable and keep the property market buoyant. He was speaking at the conference for the homebuilding industry in London recently, and said that at present people simply couldn’t afford to buy homes and couldn’t get the finance that they needed to do so.

He said that last month interest rates on a 75 percent loan to value mortgage were at a record low of 3.79 percent on average, and he said that this had resulted from measures that the government had taken to try and reduce the public deficit as well as from the base interest rate, which has been at its lowest level in the history of the Bank of England for the past nineteen months.

Shapps said: “It’s really important that we keep interest rates low for as long as possible. The biggest problem at the moment is that people can’t afford to buy your product because they can’t get the lending to get it.” He added: ” We need a housing market that is best described as boring,” he said. “We can’t go on thinking that your home is your investment, your retirement plan, and your roof over your head. We have to live in a country where housing becomes over a long period of time more affordable, and that means steadier house prices without boom or bust.”