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Industry unsurprised by rate hold

Industry pundits says that today’s rate hold came as ” surprise.”

Duncan Pownall, mortgage development manager for Bradford & Bingley, says: “Even though the MPC cut base rate last month, only five out of the nine policymakers,excluding Mervyn King, voted for the reduction.

“Indeed with the jump in the inflation rate, rising oil prices and signs of modest improvement in the retail picture the MPC was unlikely to have considered any other course of action.

“While many continue to cry out for another rate cut to revitalise certain sectors of the UK economy, most notably the subdued high street, it is likely that, for the time being, their pleas will fall on deaf ears.

“Currentlythereisa wide range of opinion on the prospects for interest rates, reflected in the rare division within the MPC, but we believe it likelythat the base rate will remain on hold for the rest of the year unless there is a dramatic downturn in housing and retail sales.”

Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, says: “This month’s decision by the Bank of England, announced today, to leave interest rates unchanged at 4.5% is not a surprise, following on the heels of their split decision to cut interest rates in August.

“Signs of a mild recovery in housing market activity over the summer months will give the BoE some reassurance that household confidence is holding up despite the rapid slowdown in consumer spending.

“The August interest rate cut will have provided a boost to housing market confidence. RICS does not believe a further interest rate cut is necessary at this point, though obviously this may need to be reassessed if the recent oil price spike knocks economic activity.”

Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, says: “Keeping the rate unchanged today is no surprise and market activity shows that borrowers are already enthused by the rate cut last month.

“We’ve seen increased interest in our base rate tracker products which is likely to be as a direct result of last month’s cut as it seems to have made variable products a more attractive proposition to those who prefer them to fixed rates.

“Maintaining the current rate should encourage more activity in the market as the stable environment provides the opportunity for brokers to offer better refinancing packages.

Lenders have already repriced their rates following the rate reduction last month and mortgage holders will reap the rewards of this.”

David Bexon, managing director of, says:
“We are just starting to see the effects of last month s rate cut drip
through to the housing market but it remains too soon to call whether or not any real lasting effect will be felt. However with consumer spending at new lows and oil prices rocketing, a further reduction is still likely to be needed. This will almost certainly
give that extra boost to a housing market that is looking to perk up from a long period of stabilisation and we may yet see single digit price inflation by the end of the year”.


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Positive outlook

The generally benign economic climate in Scotland plus the recent base rate cut should combine to ensure the housing market continues to grow, albeit at a slower rate than in recent years, says Harvey Jones

Capped sub-prime deal

Kensington has launched a three-year capped rate sub-prime product . It is available across Kensington’s standard product range with rates starting as low as 5.60%. Keith Street, director of sales, says: “This is ideal for a market seeing fluctuating interest rates. Customers’ payments cannot go higher than the agreed capped rates.”

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Guide: how to… communicate with your pension members

Effective communication of your pension scheme is a large part of getting auto-enrolment right. Delivering the same message to all employees is not necessarily the way to go. To assist you with the communication of your pension scheme, we have provided some key areas to think about, such as:

  • What to consider when segmenting your workforce
  • How to communicate to pension scheme members at the right time in their member lifecycle
  • What topics you should be discussing with your pension members
  • The new pension freedoms and the importance of communicating them


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