Boost for Mortgage Holders as Bank of England maintains interest rate at 0.5%

on Feb 5, 2015

The bank of England has kept interest rates at 0.5 per cent, in a move that is in accordance with what most analysts predict will be the continued position of the Bank for the rest of 2015.

The continued downward trend in the rate of inflation, encouraged by falling fuel prices and slower than expected economic growth are likely to have been factors in the bank’s decision to maintain interest rates at 0.5 per cent for the 71st month in a row.
The decision to maintain interest rates follows support by two members of the Bank’s Monetary Policy Committee, Ian McCafferty and Martin Weale, who previously been in favour of an increase to the base rate by 0.25 per cent. In August 2014 both men had advocated a slight increase, however it seems that this point of view was not concurred upon by the rest of the committee.

A further meeting of the committee is due in March, which will incidentally mark the fourth anniversary of the Bank’s present interest rate.
Some analysts believe that a rise in interest rates is still likely, Howard Archer, chief UK economist at IHS Global said:
“The Bank of England has stressed the importance of looking through recent and likely further near-term very weak inflation developments resulting from sharply reduced oil prices and focusing on the medium-term inflation outlook, which suggests an interest rate hike late on in 2015 remains a very real possibility.”
The Bank’s decision is good news for retail investors in the residential property market as it means that mortgage rates will continue at an all-time low, and more affordable to those looking to invest in the continued growth of the housing market

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