Bank of England freezes interest rate

The Bank of England voted to keep interest rates at 5.75 per cent yesterday, following a meeting of its monetary policy committee (MPC).

According to the MPC, there are “signs of a slowdown in consumer spending”, which was one of the factors that influenced the decision.

Economists at Bloomberg have also suggested that the MPC is being cautious in the wake of the US subprime mortgages fallout.

An Alliance & Leicester spokesman explained the implications of the decision for mortgage borrowers.

“For borrowers needing financial security and the ability to budget for their outgoings, a fixed rate mortgage will prove invaluable,” he opined.

He added: “However, for borrowers who are financially flexible, tracker mortgages can still offer good value.”

Yesterday, Nationwide warned that thousands of householders are heading for a “rate shock” when their fixed-rate terms expire in the coming months.

Borrowers who took out a fixed-rate mortgage two years ago may find themselves paying as much as £200 per week more, a spokesman said.

© Adfero Ltd

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