No rise in rates… for this month at least
The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 7-2 to maintain Bank Rate at 0.5%.
Following an increase from 0.25% in November 2017, the Bank Rate has been held at its current 0.5%.
But it may not stay that way for long – with many experts predicting an increase in interst rates in May.
The Bank’s own report admitted that an ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to its target. Inflation is currently 2.7%, against a 2% target.
The MPC added that ‘all members agree that any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent’.
The effect on borrowers
If the Bank of England does hike rates in the coming months, borrowers could see their monthly repayments rise.
Ishaan Malhi, CEO of online mortgage broker Trussle, explained: “The Bank of England may have opted to sit tight today, but it’s likely that they’ll lift rates in the next couple of months. This would impact all consumers, but particularly homeowners who’ll see mortgage rates rise to their highest level in a decade.
“In fact, we’ve already seen many lenders increase their rates in recent months in anticipation of a rate rise.
“However, today’s focus on interest rates really only highlights half the story when it comes to mortgages. As lenders change the rates of their deals, many will change the attached fees and incentives too. It’s important to take the total true cost into account, since a higher-rate deal can actually be cheaper overall than a low-rate deal.”