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Mortgage holders to benefit from rate decision

09 September 2005
The Bank of England's Monetary Policy Committee (MPC) voted today to keep interest rates steady at 4.5 per cent following last month's quarter point cut.

The announcement is good news for mortgage holders, according to Alliance & Leicester.

Head of intermediary mortgages at Alliance & Leicester, Mehrdad Yousefi said: "Maintaining the current rate should encourage more activity in the market as the stable environment provides the opportunity for brokers to offer better refinancing packages. Lenders have already re-priced their rates following the rate reduction last month and mortgage holders will reap the rewards of this."

The decision to cut the interest rate to 4.5 per cent last month split the MPC which voted five to four in favour of a quarter percentage rate cut to stimulate economic growth in the UK.

This was the first cut in rates since July 2003 when they were at 3.5 per cent.

Conflicting pressure faced the bank last month as strengthening inflation and slower growth threatened the MPC's decision.

A report by Halifax that house prices had jumped 1.7 per cent in August, combined with figures showing improvement in the manufacturing industry, reinforced the expectation that the MPC would keep the interest rates steady this month.

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