Base rate hits two year milestone
The Bank of England Monetary Policy Committee has decided to keep base rate on hold for another month, making it two full years that the rate has stayed at 0.5%. Base rate first dropped to the record low in March 2009.
The markets predicted that there was a 10% chance that base rate would increase this month and it will be very interesting to see the minutes from the meeting, which will be released in two weeks. Money markets now predict that there is a 75% chance of a quarter percentage point rise by the end of May, this year. However, the Bank Governor Meryvn King insists that the forecasts are not a done deal.
Awareness of interest rates and their impact on the cost of an average mortgage is low in the UK, as a survey revealed 25% of homeowners have no idea that interest rates are at a record low.
Of this group, 9% of mortgage holders think rates are higher than they have been for a while, according to research by the housing charity Shelter.
Shelter warned that the equivalent of 2.8m homeowners may be completely unprepared for the costs of rising interest rates based on their lack of awareness.
March 11, 2011
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