Interest rates held in May
The Bank of England has held interest rates at 0.5% for May, after much speculation that this would be the month they were hiked.
The Monetary Policy Committee at the Bank voted 7 to 2 to maintain rates at their current level following a fall in inflation to 2.5% and a weaker than expected estimate of GDP growth in the first quarter of 0.1%.
No repayment hikes
The decision to hold rates is good news for variable rate mortgage borrowers, including those on SVRs and tracker deals, as they shouldn’t see an increase in monthly repayments.
However, many still think a rate rise is imminent, so borrowers are being urged to consider locking into a fixed rate deal to protect their payments.
Ishaan Malhi, CEO of online mortgage broker Trussle, said: “After all the speculation, the Bank of England has chosen to sit tight today. However it seems that a rate rise is still imminent. Lenders have already started to increase the rates of their mortgage deals, so some borrowers will already have seen their payments increase as a result.
“While we’re coming to the end of an era of rock bottom interest rates, it’s important to remember that any changes will be gradual. A 0.25% increase will cost the average homeowner on a variable rate a little over £200 extra a year. But with the Bank of England hinting there could be multiple rate rises on the way, anyone coming to the end of their initial deal should look into switching to a new deal sooner than later.”