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Bank of England maintains interest rate at 0.5pc

Graeme Leach, Chief Economist at the Institute of Directors, said:

“The MPC was never going to raise interest rates with money supply growth near zero. Until money supply growth accelerates we believe interest rates will remain at near zero.

“We acknowledge the challenge to the Bank of England’s credibility with inflation well above target, but to raise interest rates now risks even greater contraction in the money supply; absolutely the last thing we need at the present time.”

Rosemary Rogers, Director of reallymoving.com, said:

“While price moves grab headlines, transaction levels are generally a far better indicator of the health of the property market. The prospect of a rate rise means that these are set to remain at the current very low levels over the coming months. Homeowners are bracing themselves for inevitable rate rises over the coming months, so those on variable rates who are concerned about their mortgage costs should start shopping around for a fixed rate sooner rather than later.”

Steve Lees, Director at SmartNewHomes said of the decision:

“The decision not to increase the base rate this month is good news for the industry, however, the expectation that rates will rise soon has already pushed up the cost of fixed rate mortgages and is impacting consumer confidence.

“Housebuilders continue to come up with innovative mortgage products to help make home ownership more obtainable and reduce costs, but the government needs to address the fundamental problem of a lack of finance for first time buyers, who are the life-blood of the industry. We hope that next week’s meeting between the government and housebuilders helps in finding a national solution to this very real problem.”

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