Interest rates expected to 'remain static'

08-Mar-2007

In news which may be of interest to potential first time buyers trying to get on the property ladder, the Bank of England's (BoE) monetary policy committee (MPC) will leave interest rates static at 5.25 per cent, experts suggest.

According to the results of a recent survey by Reuters, although there is a widespread expectation that interest rates will rise again, a majority do not expect that increase to occur today, which may offer comfort to first time buyers worried about rising mortgage payments.

"With the Bank of England worried about inflation expectations and wages growth, we suspect the BoE may pull the trigger one more time [this year]," said James Knightley, an economist at ING.

Indeed, although inflation fell to 2.7 per cent in February, it is still above the MPC's target rate of two per cent.

In related economic news, the European Central Bank is expected to increase interest rates to 3.75 per cent.

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

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