Base rate held – but fears remain

The Bank of England held the base rate today, something it has been doing ever since cutting the cost of borrowing to a record low 0.5 per cent two year’s ago this month.

At noon today (March 10th) the Monetary Policy Committee revealed it was keeping the rate and the level of quantitative easing the same as before.

Of course, underneath the surface there may have been some movement, for example among the strength of support for a rate rise and by how much. But this will not become clear until March 23rd when the minutes of the meeting are published.

Should this month turn out to be a 5-4 split, this could heighten expectations of a change soon, not least as the current decisions are being made against the backdrop of the most recent quarterly figures for economic output showing a contraction of 0.6 per cent in the three months to December.

While this remains speculation for now, the impact on those with debt issues may be profound. A Moneysupermarket.com study has found 42 per cent of those with mortgages fear the consequences of a base rate rise and for many this could mean a real dread of the possibility of repossession.

The site calculated that a £150,000 home loan based on the average standard variable rate of 4.74 per cent would be £44 a month more expensive to pay if the rate rose by 0.5 per cent, the amount advocated last month – and perhaps today too – by MPC hawk Andrew Sentance.

With the possibility of an increase soon, it may be wise for those who are struggling with mortgages to seek debt management help quickly.