Pound plummets: Bank of England stuns experts and keep interest rates at 0.1 percent | City & Business | Finance


Despite heavy hints and much speculation in recent weeks that rates would rise to 0.25 percent they will remain at the current rock bottom 0.1 percent.

Just two members of the nine-person Monetary Policy Committee voted to increase rates- deputy governor Sir Dave Ramsden and external member Michael Saunders.

The Bank’s reports also showed they expect inflation to peak at 5 percent next year.

Tim Bannister, Rightmove’s Director of Property Data commented: “Although interest rates are staying at 0.1 percent for now, the expectation that they’re going to slowly start to rise may lead to some buyers accelerating their plans to move and secure a fixed term mortgage deal now, due to a fear of missing out on the historically low rates that were on offer.”

“If interest rates do rise in the coming months, as expected, their effect on house prices in the short term may be muted by the ongoing high levels of demand we are seeing and the fact that interest rates will likely still be at levels well below historic norms.”

“Buyers who are already facing stretched affordability due to record house prices would find it slightly more expensive to borrow if rates rise in the coming months.

“In the rental market, some landlords who are not on fixed term deals may be tempted to pass on any increase to interest rates to their tenants by raising rents a little when contracts are up for renewal, however the value of a good long-term tenant should not be underestimated heading into the winter months. While demand for rental property remains extremely high, there are signs of more stock starting to come back onto the market, meaning tenants will have more choice after the fierce competition we saw throughout the summer.”



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