Bank Keeps Low Loan Rates
The Bank of England announced yesterday (Thursday 7th July), that the base rate of interest for loans and savings would remain on hold for yet another month.
The news came following the regular monthly meeting of the Bank’s Monetary Policy Committee (MPC) and means that the base rate has now remained at its historically low level of just 0.5 per cent for a total of 28 consecutive months.
Economists and loan industry experts were widely expecting interest rates to remain unchanged, as there has been little change in the UK economy to justify any rate rise at all, despite the fact that inflation is still currently running at 4.5 per cent and could possible go even higher over the course of the next few months.
Most financial experts now believe that we are unlikely to see any signs of loan rates increasing before the middle of next year at the earliest, with some even suggesting 2013 before an increase in loan rates.
This has come as good news to those borrowers with a variable rate home owner loan, as they can look forward to the prospect of several more months of enjoying cheap loan rates.
As a result of this, the number of re-mortgage cases has fallen over the course of the past couple of months, as borrowers take advantage of low loan rates on their current standard variable rate deal, rather than locking into a more expensive fixed rate loan deal in anticipation of an imminent rate rise.
Ben Thompson of Legal & General mortgage club said “Another month, another easy decision. Our view remains that rates will stay unchanged for the remainder of this year and in all likelihood won’t rise much any time soon, as we expect inflation to fall back sharply next year, albeit remaining a little above the Bank’s 2 per cent target.”
