BoE keeps bank rate on hold

The Bank of England (BoE) has chosen to leave the base rate of interest at its present level of 5.25 per cent.

According to Abbey, the BoE monetary policy committee’s (MPC’s) decision will not have come as much of a surprise to the markets.

Barry Naisbitt, chief economist at the firm, said that last month’s inflation report from the BoE indicated that lower interest rates were “consistent” with meeting its target of two per cent inflation.

This month, the majority of the MPC’s members decided that slowing economic activity “needed to be balanced against their expectation that activity would slow and that inflation indicators remain high”, he claimed.

However, Mr Naisbitt suggested that this view is likely to change over the coming months and a rate cut could be on the way.

Responding to the move, Colbalt Capital said that leaving rates unchanged was “a shame” but noted that the MPC was in a “no-win situation”.

A cut would have been a “welcome boost” for homeowners, it stated.

Tags: present level, economist, expectation, committee, Colbalt, Colbalt Capital, economics, rate cut

Mortgage lending remains “robust” in 2007

Mortgage lending remained robust in January 2007, according to data released by the Council of Mortgage Lenders (CML).

The CML’s figures show that some £26.8 billion was taken on by borrowers during the month.

Although this was six per cent less than the £28.5 billion lent in December 2006, it compares favourably with the £23 billion borrowed during January 2006.

Michael Coogan, director general of the CML, said that the “robust” start to the mortgage-lending market was set to continue over the next few months.

However, Mr Coogan also indicated that there was a certain degree of uncertainty because of the expectation that there would be a further quarter point interest rate rise during 2007.

“Because of this uncertainty, it would be surprising if some home buyers did not review the timing of their decision now,” he added.

Figures released by the British Insurance Brokers’ Association also showed a slight downturn, with the group saying mortgage lending amounted to £5.6 billion last month, compared to 5.7 billion in December 2006.

Tags: Business Finance, expectation, insurance brokers association, degree of uncertainty, director, mortgage lenders, home, timing