Base rate frozen at 0.5 per cent

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  • | by Kristian Dando

The Monetary Policy Committee of the Bank of England has kept the base rate fixed at 0.5 per cent in its first announcement of 2011.

It’s been nearly two years since the last time the base rate was changed, but might the New Year bring about a rise in the historic low rate?

“I can’t see it happening in the very near future not in the first few months of the year at least,” says business development director at John Miles. “Of course, it’s not something that can’t be ruled out altogether.”

The low base rate has made for a mortgage market with plenty of tantalising offers. But whether potential homebuyers can take advantage of them or not is another story.

“The difficulty in the mortgage market is that first time buyers are finding it hard to get accepted because of the large deposits required," says Miles. “Those with savings have also not had much to cheer about,” says Miles. “But that’s not to say that there aren’t options out there. People can consider stocks and shares, or perhaps fixed rate bonds. But these will present a greater degree of risk or will tie-up money for a specific term, which might not necessarily appeal."