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Interest rates held at 0.5%

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
15/01/2016

The Monetary Policy Committee has voted to hold interest rates at 0.5% for another month, but borrowers shouldn’t be complacent

The Bank of England’s Monetary Policy Committee voted by eight to one yesterday to hold the Bank Base Rate at its record low of 0.5%.

It’s good news for mortgage borrowers on a variable rate deal as Base Rate influences wider interest rates. This means it’s unlikely they will see an increase in their mortgage pay rate in the near future.

However, industry experts warned that borrowers should not be complacent about low interest rates. Although Base Rate has been held at 0.5% for almost seven years, it’s inevitable that interest rates will go up at some point, and many believe that could be in the coming year.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Borrowers will likely greet today’s decision by the Bank of England with apathy, but must not believe this low interest rate environment will last forever. Earlier this month, George Osborne warned mortgage holders must be prepared for a UK interest rise in 2016, following the hike in US rates last month. Although such a rise was unlikely in January, it’s crucial that borrowers on an SVR or those at the end of their current agreement look to secure a more beneficial rate by remortgaging now, before lenders price-in the inevitable rise.

“There is a generation of borrowers that now exist who are yet to experience the impact of a rate rise, and in the New Year it is important they understand how such an increase could affect their monthly finances. By speaking to their broker sooner rather than later, they could potentially save themselves a substantial amount in monthly interest, the equivalent of a pay rise.”