The Bank of England’s Monetary Policy Committee has voted to keep interest rates on hold at 0.5 per cent, but with an increased number of members calling for a rate rise.
Chief economist Andy Haldane has joined those calling for a rise. The BoE revealed that six members voted to keep rates on hold, with three voting to push up interest rates. Previously the vote was split 7-2.
There was almost universal agreement among economist and housing experts that the BoE would keep rates on hold this month. However the news that Haldane has turned “hawkish” will increase expectations that rates will rise later this year, possibly as early as August.
Online mortgage broker Trussle chief executive Ishaan Malhi says: “The Bank of England has chosen to sit tight today but another rate rise is looking imminent and will likely affect mortgage rates.”
He points out that the cost of many mortgage deals has typically risen ahead of an anticipated rise in the base rate. “This means if the Bank of England acts in August, as predicted, we could see mortgage interest rates start to shift upwards as early as next month.”
London & Country’s mortgage expert David Hollingworth adds: “It may be of little surprise that the base rate has been held but that doesn’t leave room for complacency.”
He pointed out that the cost of two-year fixed rates has climbed over the past year, from below 1 per cent to around 1.30 per cent today.
Homeowners should take advantage of the deals currently on offer to prepare for and buffer against future rates rises.
“Delaying a decision to remortgage could see fixed rate options rise further,” he adds.
The Bank of England was forced to put off a widely expected rate rise in May after weak first economic growth in the first quarter of the year. However, the Bank has indicated that it believes this weakness was temporary, caused in part by the bad weather.