Recent International Monetary Fund calls for the Bank of England to cut the base rate have gone unheeded as the cost of borrowing was maintained at 0….
Recent International Monetary Fund calls for the Bank of England to cut the base rate have gone unheeded as the cost of borrowing was maintained at 0.5 per cent by the Monetary Policy Committee (MPC) today (August 2nd).
Then MPC also decided to maintain the current level of quantitative easing (QE) at £375 billion, despite the recent news that Britain's gross domestic product dipped by 0.7 per cent in the second quarter.
For people struggling to pay off their mortgages, it means the monthly cost is likely to remain stable, particularly for those with tracker deals.
People who do have mortgage problems should seek help and advice at an early stage to maximise their chances of preventing repossession.
Commenting on the decision, European Economist at Schroders Azad Zangana said this was likely to be the case this month because the impact of the new Funding for Lending Scheme and last month's expansion of QE will need to be assessed before the MPC decides on any further policy moves.
Head of economic analysis at the Confederation of British Industry Anna Leach also said the decision was expected and suggested Funding for Lending Scheme may help successfully bolster the economy by helping businesses get funding.
However, she noted: "The outlook for the UK economy remains fragile."
That situation may be a major factor in the ability of consumers to pay their mortgages, as a further decline in the economy could lead to unemployment starting to rise again. This would mean incomes falling and some people being unable to maintain their payments as a result.
Last month saw a £50 billion rise in the level of asset purchases, which seven of the nine MPC members supported.
Spencer Dale and Ben Broadbent were opposed to the move, preferring to maintain the QE figure at £325 billion.
By James Francis