Rates held despite expectation of cut
Despite widespread expectations of a reduction in interest rates the Bank of England has decided to maintain the historic low level of 0.5%.
This nine-strong Monetary Policy Committee had voted to keep the interest rate at 0.5% for a total of 88 months.
The 0.5% rate, announced on Thursday 5 March 2009, is the lowest level seen in the UK in more than 300 years.
Markets had priced the likelihood of a cut at 75% but Bank of England governor Mark Carney has decided to keep them waiting – at least for now.
Jeremy Duncombe, director, Legal & General Mortgage Club, said of the hold: “Despite the fact that Bank of England has decided to maintain the base rate at 0.5%, where it has stayed for seven years and counting, many lenders have already taken steps to price a base rate reduction into their products, and cheaper fixed rate deals over longer terms have started to come to market over recent weeks.
“Despite the uncertainty around Britain’s decision to leave the European Union, the mortgage market appears to have reacted calmly. Whether base rate is cut in future or not, uncertainty presents a good opportunity for brokers to talk to their clients about potential mortgage and remortgage options available to them given the new market dynamics.”
Before the decision to quit the EU the Bank of England had been priming itself to eventually start raising rates. A move that now seems even more distant.