Interest rates kept at 0.5% - Mortgages - News - Moneyfacts


Interest rates kept at 0.5%

Interest rates kept at 0.5%

Category: Mortgages

Updated: 07/11/2013
First Published: 07/11/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England's Monetary Policy Committee (MPC) has voted to keep base rate at its record low of 0.5% for another month at least.

The MPC's decision came as no surprise seeing as a few months ago the bank announced it would not consider an increase until the unemployment rate falls to 7% - currently it is at 7.7% - and it only expects this to happen in 2016.

Earlier this week, however, a leading think-tank – the National Institute of Economic and Social Research – announced that it predicts unemployment will fall to 7% in 2015 - a year before the BoE's forecast. It also said that, with the UK's economic activity picking up considerably, there is a 20% chance that unemployment could fall to 7% as early as next year.

Meanwhile, in separate research, Halifax revealed that with base rate having remained at its record low since March 2009, mortgage repayments for new borrowers are now at their most affordable in 14 years.

According to the bank, mortgage repayments, on average, account for 27% of a new borrower's disposable income.

This is the lowest proportion since 1999 and comfortably below the average of 36% seen over the past 30 years.

The bank also revealed that house prices in October were 6.9% higher than the same month in 2012 and rose 0.7% from September 2013.

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