Bank Base Rate held at 5.75 per cent

The Bank of England's Monetary Policy Committee has voted to hold the Base Rate at 5.75 per cent.

Mark Leaper, of Moneymatchmaker.com, said: “Today’s decision by the Bank of Englands Monetary Policy Commitee is the first in many months that will allow UK homeowners with mortgages to breath a sigh of relief. Today’s decision may well signal that interest rates have reached their peak and it would be beyond the realms of possibility for the next movement in interest rates could well be in downward directiom, but Leaper added that he didn't expect to see that happening until next year.

Interestingly, the MPC made a point of saying in the minutes of the last MPC meeting, that most of the impact from the previous five bank rate rises has still yet to be felt in the housing market. This is mailnly due to many borrowers being sheltered from rises, due to the fact that they have fixed rate mortgage deals. Many borrowers are coming to the end of their fixed rate mortgages, currently about 75% are on 2 year fixed rate deals, the impact of reverting to standard variable rates will have a huge impact upon consumers.

When asked to comment, another industry spokesman said: "It has been 12 months since the Bank of England started to put rates up after a year long run of maintaining them at 4.50%, so with rates now more than one per cent higher than this time last year, this pause will come as a welcome break for homeowners and borrowers.

"It was widely anticipated the rates would remain at 5.75% for August, especially after the quarter per cent rise last month and continued uncertainty within the financial markets over the funding of leveraged buy-outs, stock market volatility and the potential losses that are now emerging out of the US non-conforming mortgage market.

"For borrowers with high levels of affordability, tracker mortgages continue to offer good value in the current interest rate environment. We would have to see another one or two rate increases for tracker mortgages to reach the current rates offered on many fixed products. However, borrowers opting for a tracker mortgage need to be financially comfortable enough to withstand an increase in monthly payments should there be any future rate rises. Alliance & Leicester has a competitive 2 year base rate tracker priced at 5.44% and we have a very competitive low-start 2 year fixed rate at 5.34%. We also have excellent FeeSaver deals which are ideal for first time buyers who want to minimise up-front fees."

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