Bank of England keeps interest rates at 0.5%

Responding to the Bank’s interest rate decision, Lee Bramzell, Chief Executive of portal PropertyIndex.com, said: "If the housing market is to recover successfully and regain a deep-set stability, it is imperative that the base rate continues to sit at 0.5% for the rest of 2009.

"Lenders must also play their part by continuing to boost mortgage approvals and at the same time resisting the urge to nudge their product rates up, so that consumer confidence and therefore market activity can return to healthy levels once more."

Nick Hopkinson, Director of Property Portfolio Rescue (PPR), said: "Today’s decision is no surprise, with interest rates unlikely to change for the remainder of the year. However, anyone currently benefiting from their lender’s standard variable rate should not be complacent. Most banks are already increasing their fixed rates."

But he also warned: "The Committee’s decision to continue its programme of Quantative Easing (QE) will almost inevitably lead to higher inflation. When the Bank of England begins to increase interest rates once more to keep this in check, many borrowers will find themselves with limited options, suffering escalating mortgage costs and a home that is decreasing in value.

"Home owners and borrowers need to prepare for this increasing cost and negative equity ‘time-bomb’ by reducing debts and saving hard now."

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2 thoughts on “Bank of England keeps interest rates at 0.5%

  1. Peter Rollings

    This is no surprise – lowering interest rates any further wouldn’t work and it’s not as if the MPC could drop them much further anyway. QE is the answer the market is looking for. Keeping the money supply up is imperative for driving cash through the banks and into the hand of borrowers. The banks must up the stakes on mortgage finance – a proper recovery in the housing market won’t be possible without it. Having said that, if we maintain the status quo, we’ll begin to see house prices tick up by the beginning of 2010 – although in the capital they may start edging north towards the end of this year. Peter rollings

  2. Peter Rollings

    This is no surprise – lowering interest rates any further wouldn’t work and it’s not as if the MPC could drop them much further anyway. QE is the answer the market is looking for. Keeping the money supply up is imperative for driving cash through the banks and into the hand of borrowers. The banks must up the stakes on mortgage finance – a proper recovery in the housing market won’t be possible without it. Having said that, if we maintain the status quo, we’ll begin to see house prices tick up by the beginning of 2010 – although in the capital they may start edging north towards the end of this year. Peter

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