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Interest rates unchanged

06 October 2006
The Bank of England Monetary Policy Committee (MPC) has voted to maintain interest rates at 4.75 per cent for the second month in succession.

The MPC had surprised some analysts by upping rates by a quarter per cent on August 3, when it was widely thought that this move would be taken around now, rather than sooner.

A decision to maintain the status quo had been predicted by the majority of market observers, who believed that the actions taken to raise interest rates two months ago are still filtering through the economy and so the BoE is adopting a "wait and see" attitude.

"It comes as no surprise that rates remain on hold this month," said Alliance and Leicester's Mehrdad Yousefi.

"However, given a buoyant economy and above target inflation, a rise in the base rate before the end of the year is anticipated and rates are likely to hit five per cent before the year is out."

Mr Yousefi recommended first-time buyers on tight budgets should look at fixed-rate products for borrowing money to purchase a house, as this would secure them against rising rates for the immediate future.

To find out more about first-time buyer mortgages, click here.

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