Bank base rate remains on hold at 0.5pc

Nia Williams

May 9, 2013

The Bank also announced that it will keep its quantitative easing programme on hold.

The decision was expected as recent economic data seems to show improving conditions; plus it is anticipated that nothing will change before Mark Carney takes over from Sir Mervyn King as governor of the Bank of England.

Commenting, Simon Gammon, managing partner of Knight Frank Finance, said: “While the news from the UK’s central bank remains unchanged, there are genuinely positive signs emerging in the lending sector.

“Not least among these was the recent trading update which showed that Royal Bank of Scotland, the state-owned bank, returning to profit in the first three months of this year for the first time in 18 months. In addition, Lloyds Banking group made an impressive profit in the 1st quarter.

“This will raise hopes that the banks may be more willing to extend mortgages to homebuyers and movers, although this comes with a caveat that banks are still having to comply with stiff capital requirements.

“Despite interest rates staying on hold, we have seen some of our clients opting to move to fixed rate deals in recent months, typically five-year fixes at around 3%.

“This indicates that borrowers are still keeping one eye on the future – factoring in an economic recovery, and the rise in rates that will inevitably accompany it.”

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