Interest rates frozen
February 8, 2007 by admin
Filed under News, News-Mortgages
Interest rates are to remain at 5.25 per cent after the Bank of England decided not to increase the rates further.
Last month the bank surprised everyone by announcing an increase of 0.25 per cent, but today’s decision had been widely anticipated.
The Bank of England’s Monetary Policy Committee (MPC) has increased interest rates three times in the last six months, as it tried to bring inflation rates under control.
Today’s decision to freeze interest rates will be welcomed by those who have a mortgage, but there are warnings that future rises are almost inevitable.
“Today’s MPC decision to maintain the base rate at 5.25 per cent will come as a welcome relief to borrowers, but many market analysts will view this latest decision by the Bank of England as a mere delay of an inevitable further rate rise,” said Mehrdad Yousefi from Alliance & Leicester.
“Inflationary pressures on the economy remain strong, including some above inflation pay deals, and they will play a key part in future base rate decisions.
“The consensus of opinion is that it is very likely that we will see another rate rise in the first half of 2007, so it is crucial that borrowers assess what impact any possible future base rate rises could have on their finances,” he added.
In January it was revealed that inflation was running at levels not seen since 1997 when the Bank took control of setting interest rates from the chancellor.
People borrowing money should be sure that they have the financial flexibility to cope with a sudden rise in interest rates.
