The minutes of the Bank of England’s recent Monetary Policy Committee meeting show that no member pushed for a rise in the Bank Rate.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Although the committee voted unanimously against a rise, we don’t expect the same to happen again in future months. Members have hinted that they are likely to ramp up the pressure to change the base rate in the remainder of the year, as inflation and the wider economy are projected to gain momentum in the coming months.
“The fact that rates have stayed the same for six years may have driven many borrowers into complacency when it comes to seeking the best deal for them. Someone on their lenders SVR with a £150,000 loan and a 40% deposit, for example, could save over £4,000 per year. The savings are even greater the bigger the loan, so savings are there to be had across the whole market.
“It’s crucial that brokers bring the prospect of upcoming rate rises to the attention on their clients, so that they can make the most of record low rates and effectively give themselves a pay-rise before it’s too late.”
Calum Bennie, savings spokesperson at Scottish Friendly, added: “We are currently sitting at amber. The committee can see the road ahead is clear, but do not want to jump the light on a rate rise too early. Concerns around the balance between external price pressure and domestic costs, as well as the fragility of the European market, is keeping the committee firmly in neutral at this stage.
“The Governor’s comments last week that interest rates might rise before the end of the year, when put into this context, now look even more likely to materialise. The question is whether economic growth – which is certainly recovering – is enough to support the increase in wages relative to productivity and can be sustained in light of current global risks.
“An interest rate move looks to be on the immediate horizon, around the end of the year. While rate rises will be modest, borrowers will still need to baton down the hatches and get prepared for rising costs. Those that can, should put money aside now and prepare. The winter is coming.”