Bank Base Rate Stays Constant
There were no major surprises yesterday (Thursday 10th December) following the Bank of England’s Monetary Policy Committee (MPC) meeting to discuss the economy and the base rate of interest for savings and loans.
It was decided that the base rate of interest should be kept at its current level of 0.5 per cent for another month, making a total of nine consecutive months without any rate change since the rate reached its all time historic low of just 0.5 per cent in April this year. The MPC also decided to leave the current level of its quantitative easing programme unchanged at £200 billion. The quantitative easing programme is due to be reviewed in January next year and the MPC will make a decision then as to whether or not this needs to be extended.
The news comes as no surprise to industry experts, who expected the rate to remain unchanged. For those people with home owner loans and individuals with personal loans on variable interest rates it means that there is not likely to be any change to the amount payable on their loans each month. It is welcome to see, however, that banks are slowly beginning to lower the interest rates they charge on new home owner loan products and, although there is still a long way to go, loan rates are edging closer towards the Bank base rate.
Nobody expects the interest rate to decrease any further than its current level, as there is nowhere for it to realistically go, which means that any future change in rates is likely to be upwards. Therefore, the news that there is no change will come as a welcome relief to many borrowers with variable and tracker rate loans, who would be likely to struggle with their loan repayments if rates were to increase.
