Loan Rates Could Remain Cheaper For Longer
The minutes from Junes meeting of the Bank of England’s Monetary Policy Committee (MPC) were published yesterday (Wednesday 22nd June) and have shown that the committee voted to keep the base rate of interest for loans and savings on hold at 0.5 per cent by seven votes to two.
This was the first MPC meeting for the committee’s newest member, Ben Broadbent, who voted with the majority to keep loan rates at their all time low level for another month.
Mr Broadbent has replaced Andrew Sentance on the committee. Mr Sentance was the one member of the committee who had consistently been voting for several months for loan rates to be increased to one per cent, double their current rate.
With Mr Sentance now gone from the MPC, it only leaves two members, Spencer Dale and Martin Weale, in favour of an increase in the cost of a typical variable rate home owner loan and both these members support an increase of just 0.25 per cent.
But with another member of the MPC now on the side of holding the current low loan rates, it could mean that interest rates for those borrowers struggling with their home owner loans remain on hold for even longer than has been anticipated, giving borrowers more breathing space with cheap loan repayments for a little while longer.
A spokesman for the Centre for Economics and Business Research (CEBR) said “As expected, the replacement of the inflation hawk Andrew Sentance with the more dovish Ben Broadbent has reduced the number of members voting for a rise by one and increased the chance of monetary policy remaining unchanged this year.”
“A rate rise- and a subsequent rise in household mortgage interest payments- could be the straw that breaks the camel’s back and the MPC is all too aware of that risk.”
