Bank Base Rate held at 0.5%

The Bank of England has maintained interest rates at their historic low level of 0.5% for the fourth month in a row.

The Bank’s decision came as no surprise to observers.

Jonathan Cornell, spokesman for First Action Finance, said: “It will be interesting to see if lenders are as quick to cut their fixed rates as they were to increase them. I suspect that most lenders will be happy to enjoy the chronic lack of competition they now face in the current climate and the higher margins they are earning on their new lending at the expense of borrowers.

“If the green shoots in the housing market are to survive then the Government will need to find a way of making sure there is genuine competition in the mortgage market otherwise cash strapped borrowers will continue to be exploited. However anyone hoping for an increase in competition is likely to disappointed as this would derail the process of fattening up the banks which the Government owns ready for a sale before the next election.”

Ray Boulger, senior technical manager at John Charcol, said: “The decision to leave the Bank Base Rate unchanged for another month was really the only possible conclusion and the committee probably spent more time discussing the quantitative easing programme than whether to change the Bank Base Rate.

“With the £125bn already committed due to be spent by the end of this month but bank lending, especially for mortgages, still woefully inadequate, agreeing to utilise the final £25bn approved by the Treasury was probably not a difficult decision.”