The Bank of England’s Monetary Policy Committee has voted by eight members to one to hold its Bank Rate at 0.5% for another month.

The Bank Rate is closely linked to the interest rates paid by mortgage borrowers and savers, so the news that it will not rise will be particularly welcomed by those with variable rate homeloans.

Some experts have now predicted that the historic low rate of 0.5%, which has been in place since 2009, could in fact be maintained until 2017. This would help keep mortgage interest rates low for the medium term, which would hopefully prevent more borrowers from falling into mortgage arrears.

Baby steps

In addition the Bank of England hinted yesterday that when Bank Rate does finally begin to increase, the rises will be small and steady.

Its report stated: “When Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles. This guidance is an expectation, not a promise. The actual path Bank Rate will follow over the next few years will depend on the economic circumstances.”