Base rate held at 0.50pc

Ryan Fowler

August 7, 2014

This is now the 65th consecutive month which the MPC has decided to keep the rate at its historic low level.

The MPC also said it would make no change to the amount of monetary stimulus it provides through quantitative easing.

The decision to hold both rates and QE at current levels was widely anticipated despite speculation that the base rate could rise by the end of 2014.

However, doubts have been raised as to whether the decision to maintain the status quo was unanimous.

Jeremy Duncombe, director, Legal & General Mortgage Club, said: “Although interest rates have once again been held, there has been speculation that this was no longer a unanimous decision by the Monetary Policy Committee.

“An increase in interest rates is very much on the cards and this could happen in a relatively short period of time.

“Our Mortgage Mood survey shows that 68% of homeowners believe that rates will rise within a year, and most don’t believe that they will increase by more than 1%.

“However, historically low rates have distorted people’s perception of what a ‘normal’ mortgage rate should be, with a quarter of homeowners believing that it should be between 1.1% and 3%.

“The industry needs to work together to raise awareness among homeowners of the direct impact a rate rise might have on their repayments and help them come up with a real strategy to cope with that eventuality.”

Sign up to our daily email