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A&L says rate decision was expected

Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester says the Monetary Policy Committees decision to maintain rates at 4.5% was expected.

He says: “Despite murmurings of a rise this month, it is not a surprise that the MPC has decided to maintain rates.

“The committee is likely to have been split in its decision on whether or
not to raise interest rates despite recent credit growth in the economy.

However, last month’s minutes suggest they will look to maintain rates in
the short term.

“Most commentators agree that we are unlikely to see any
movement in rates until August at the earliest, when the Bank of England
issues its quarterly inflation report.

“The current stable housing market and single digit rise in house prices
occurring for the first time this year further underlines the need to
maintain interest rates at this stage.

The decision to raise or reduce interest rates will remain finely balanced for the remainder of the year and will be subject to both economic statistics and the stability of the wider financial markets.

“Homeowners and prospective purchasers should take this opportunity to look at current tracker mortgage deals, with many deals currently priced lower than the base rate. Households on tight budgets may still prefer the
certainty that fixed rates offer.”

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