First time buyers receive rates reprieve

06-Sep-2007

Interest rates will remain at 5.75 per cent for September, the Bank of England has announced, in a move which some analysts are seeing as a sign that first time buyers and other borrowers could now be in for a prolonged period of stability.

Given lower inflation and the uncertainty surrounding financial markets, many market observers now suggest that rates have peaked, though most acknowledge that the Bank remains concerned about the aforementioned variables.

But five rate rises since last August mean that the Bank is likely to be more cautious for now, suggested Howard Archer, chief UK and European economist at Global Insight.

"We now no longer expect interest rates to rise to six per cent in the fourth quarter, but instead anticipate that the Bank of England will sit tight for an extended period," Mr Archer advised.

Jonathan Said, chief economist at the Centre for Economics and Business Research, also noted that rates may have peaked, but added that a number of Monetary Policy Commiteee (MPC) members would have wanted rates to rise today.

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