The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 5.75%.
Although homeowners can be relieved that there is no further rise, James Caldwell, director of Fair Investment Company says the Bank of England should have gone one step further and cut the base rate.
“The Monetary Policy Committee’s decision to maintain the bank rate at 5.75% is disappointing for homeowners - a cut now would have been very useful,” he said.
“On a £200,000 mortgage, even a reduction of just a quarter of a per cent would mean a saving of £30 a month, which would have a significant affect on the average family’s monthly finances.”
There have been three rises in the bank rate in the past year, most recently a rise of 0.25% in July, and although savers have been reaping the rewards, homeowners have been squeezed, seeing their monthly mortgage repayments going up and up.
But, although Mr Caldwell says he would like to see the rate reduced, he is not surprised it has been held at 5.75 per cent.
“In light of the recent turmoil in the world’s financial markets, including the sub prime crisis in the US and the Northern Rock fiasco in the UK, it is not surprising that the Bank of England is continuing to be cautious, and waiting until the dust has settled before making any decisions to cut rates,” he said.
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