News that banks are looking to further tighten their lending criteria and the ever reducing number of new mortgage approvals raises hopes that the Bank of England will cut interest rates. (more…)

The proposed $700m bail out of the US Economy and Wall Street put forward by George Bush is stalling as legislators are worried about the cost and the governments level of involvement in the financial sector. However Bush remains optimistic that plans will be passed as Congress have vowed to stay in session until a deal is done.

The stalling created nervousness on this side of the pond and sent the FTSE down 109 points (2%) to 5,088. The bad news was compounded by Banks announcing that mortgage rates were on the increase again as liquidity in the market remains non-existent.

As expected, the Bank of England’s Monetary Policy Committee have kept interest rates on hold at 5%. With inflation at 3.3% against a target of 2% this was the only decision the MPC were likely to take, despite incresing economic concerns and fears that the UK could be entering a recession. If there are further signs of a downturn, the Bank must be prepared to act quickly and cut rates.

The FTSE ended the week at 5,529.90 taking the fall for the first half of the year to 14.4%, the worst performance of the index since 1994 when it fell 14.6%. The continued sell-off of stocks came as oil hit $142.69 a barrel, news which reverberated around world markets. Analysts had initially predicted a poor start to the year, but with better prospects for the second half of 2008, however this optimism is waning and so it could be a bumpy ride all the way in to 2009.

The Bradford & Bingley, Co-operative bank and First Direct have today raised the cost of their fixed rate mortgages as Banks find it increasingly difficult to raise finance to fund mortgage deals. The Co-op saw the biggest rise as they increased their rates between 0.7% and 0.9%. The move by these three banks now takes the average cost of a fixed rate mortgage to over 7%. (more…)

The Governor of the Bank of England has warned that consumer inflation could top 4% this year as increases in food and energy costs continue to push up inflation. Mervyn King was speaking after the Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rose by 3.3% in May. (more…)

The cost of oil eased back from its New York trading session high of $139.89 to end the session at $138.86. This despite the news that Saudi Arabia has agreed to increase its oil output by 200,000 barrels per day. This takes the increase to 550,000 per day and is the highest output figure from the Saudi’s since August 1981. (more…)