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Bank of England Maintains Rate at 5.0%

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News Release
7 August 2008

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 5.0%.

It is the fourth consecutive month that the Bank has held rates steady.

The previous change in Bank Rate was a reduction of 0.25 percentage points to 5.0% on 10 April 2008.

The Council of Mortgage Lenders said:

“a reduction would have been a welcome recognition of the current financial strains on households already struggling with hikes in other living costs.

“As a result of recent Bank rate reductions, mortgage rates are below their peak at the end of 2007 but many consumers will be looking to the MPC to respond soon to the slowing economy and reducing inflationary pressures.”

Mortgage Fee Increases
Mortgageintroducer.com reported that during the last month the average fee has increased by nearly £100, meaning that borrowers have not benefited as much from (mortgage rate) reduction(s) as expected.”

“In recent weeks many lenders have announced cuts in their mortgage rates, leading to many people predicting that we may have turned that corner. The average rate on a two-year fixed rate mortgage has dropped from 7.08% at its peak on 11 July to 6.90% today, but typically there is a sting in the tail..’

Sources:
Bank of England
Council of Mortgage Lenders
Mortgage Introducer

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