Half-point rate rise 'considered' by Bank

24-May-2007

In news which may be of interest to first time home buyers, a half-point interest rate rise was considered this month by the Bank of England's monetary policy committee (MPC), it has emerged.

However, according to the published minutes of the MPC's meeting, although a 50 basis point increase was considered, the decision to increase interest rates by 0.25 per cent was unanimous, which may relieve first time home buyers concerned about interest rate rises.

"What is clear is that in a background of buoyant money and credit growth, they are not willing to take any chances," said Karen Ward, a representative of HSBC.

"This is a hawkish set of minutes that point firmly to another interest rate hike before long," added Howard Archer at Global Insight.

According to the published minutes, a 50-point rise was considered in light of the widespread expectation that interest rates would be rising by 0.25 per cent in May.

The Bank of England was granted control over the setting of interest rates in 1997.

To find out about the different ways of financing a first home, see our section ‘Affording Your First Home’.

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