The Bank of England’s Monetary Policy Committee (MPC) has voted 8-1 to maintain the Bank Rate at 0.5%.
Ian McCafferty was the single dissenter, seeking to increase Bank Rate by 25 basis points, given his view that building domestic cost pressures were likely to come to outweigh the dampening influence of the appreciation of sterling, causing inflation to overshoot the 2% target in the medium term.
The MPC voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves – so-called quantitative easing – at £375 billion.
The Bank Rate has been at 0.5% since March 2009.
“It is no surprise that the Bank of England has chosen not to raise interest rates today<” said Jeremy Duncombe, director of Legal & General Mortgage Club. “However, a rise in the base rate is inevitable, and when it does come, it will have a significant impact on mortgage rates, even if the increase itself is quite small.
“There are some very competitive mortgage deals currently available, however, banks will start to withdraw these as an interest rate rise draws closer., A borrower who is currently on their lender’s SVR and who decides to remortgage now could reduce their monthly mortgage payments by £343, equalling a saving of £8,253.36 over the term of their mortgage. However, a borrower with the same mortgage who waits until the BBR rises to 1% would only reduce their monthly payments by £279.76 and would save £6,714.24 over the term of the mortgage.”