Rates hold provides respite for first time buyers

02-Aug-2007

The Bank of England has announced that it has held interest rates at their current level of 5.75 per cent, providing a degree of respite for first time buyers already struggling to cope with rising costs.

The Bank's decision comes exactly a year after it decided to raise rates to 4.75 per cent, marking the beginning of a 12 month period in which rates were raised on five separate occasions.

"We believe that six per cent is likely to be the peak in interest rates as we anticipate some moderation in consumer spending and overall growth during the second half of the year will gradually dilute underlying inflationary pressures," commented Howard Archer of Global Insight.

"However, we suspect that the Bank of England will keep interest rates at six per cent for an extended period," Mr Archer added.

Research by Abbey published earlier this week found that 18 per cent of first time buyers believed that interest rates would fall in the future.

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