Base Rate of Interest Kept at Record Low
The Bank of England has decided again to maintain the historic low level of the base rate of interest, spelling good news for people with – or intending to take out – unsecured personal loans.
The Bank’s Monetary Policy Committee (MPC) voted overwhelmingly last month to keep interest rates at their record low of 0.5 per cent. This is the 16th consecutive month that the base rate has been kept at this figure.
It was revealed today that last month, only one member of the MPC, Andrew Sentence, voted to increase rates to 0.75 per cent in order to combat inflation – the first member to demand a rise for nearly two years.
The minutes of July’s meeting, which led to today’s decision, will be released in a fortnight’s time, when it will be possible to see if support for such anti-inflationary measures has grown. The results will be particularly noteworthy if inflation remains above the Bank’s 2 per cent target.
In the meantime, the continuing low base rate of interest means that unsecured personal loans, credit cards and mortgages will remain fairly stable, with APR based upon the historic low.
Many commentators believe that this situation is set to continue, increasing confidence in the personal loans market. One expert, mortgage broker John Charcol’s Ray Boulger told BBC News that he did not expect to see any increase in the base rate until well into 2011 and even then, rates would “only rise slowly”.
When it came to mortgages, he said that “lifetime trackers still offer better value for the time being”.
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