Interest rates held despite rise speculation
The Bank of England has elected to keep the interest rate at 0.5% despite continued speculation that a rise is imminent.
The MPC voted 7-2 to keep the rate at 0.5% with Ian McCafferty and Michael Saunders arguing that borrowing costs should go up.
The Bank has also cut its growth forecasts predicting that the economy will only grow by 1.4% this year, down from 1.8% expected just three months ago.
This follows disappointing GDP figures at the start of this year with growth of just 0.1%.
Growth in 2019 and 2020 has been also been cut from 1.8% to 1.7%.
David Whittaker, CEO of Mortgages for Business, said: “Like many market commentators we are not surprised that the MPC chose not to raise Bank Rate this month. The current economic picture is somewhat gloomier than predicted back in November.
“I think we will now have to wait until the August MPC meeting before we can expect to see a rate hike, although this will depend in part on the contents of the quarterly inflation report. For now, though, it’s carpe diem for mortgage-seeking landlords, particularly those who prefer variable rates.
“There is also a little three-month wiggle room for those who like a fixed rate comfort blanket. Even though swaps have been climbing over the last six months, market competition has kept fixed rates low as lenders prefer to reduce their margins than lose business, and I expect this situation to continue until August.”
Steve Seal, director of sales and marketing, Bluestone Mortgages, added: “Following Mark Carney’s recent comments and with inflation faring better than previously expected, he has clearly kept to his word of holding rates, despite earlier speculation of a forthcoming rise.
“However, a rise soon is still very likely, and those uncertain about their finances are encouraged to speak to a mortgage broker. Brokers will be able to provide reassurance by assessing borrowers’ individual circumstances to ensure the nature of their situation is fully understood before any lending decisions are made.
“It’s essential that customers are provided with options tailored to their specific needs, whether that’s remortgaging, locking into a fixed rate or a product transfer, to secure a deal most suitable to them.”