The Bank of England has held interest rates at 0.5% for the sixth consecutive month. With many indicators showing tentative signs that the worst of the recession may be over, the bank signalled its intention to continue to review its program of quantitative easing, and expects the current allocation of £175 billion to be reached in two months. Quantitative easing is designed to encourage banks to lend to both business and individuals, but despite being almost £150 billion into the program, mortgage funds remain tight, especially for those with less than 25% in deposit or existing equity. As expectation of continued low interest rates grows, more borrowers are turning to variable rates such as trackers, but as most carry penalties for early repayment, they may well lock in the borrower past the point at which rates start to rise.
Interest Rates Unchanged