Interest Rates Held Again

Interest Rates Held Again.

The Bank of England has yet again kept interest rates at 0.5% with a majority vote of 8 to 1 by members of the monetary policy committee.

Given low oil prices and the potential for economic slowdown, inflation has been "flat-lining" which has reduced the risk of an interest rate increase.

That said, the Governor of the Bank of England, Mark Carney, still suggests that interest rates will rise in 2016 although most people are now not expecting interest rate increases in the UK until the middle of 2016 rather than early 2016 as predicted.

What should you do?

The first interest rate rise next year will likely be an additional 0.25% taking interest rates up to 0.75% per annum. This will not dramatically improve the position for savers but for people with mortgages and extra 0.25% on your mortgage may be costly if you have a large mortgage outstanding.

We suggest each time you see these headlines you should not sit tight and do nothing. Interest rates will rise again. If you are on a variable rate mortgage or an index tracker mortgage when the time comes to remortgage you should consider looking at fixed rates and locking in today at the historically low rates.