The Monetary Policy Committee has held interest rates at 0.5% for the second month in a row.

Ray Boulger, senior technical manager at John Charcol, says that a hold at 0.5% is likely to be the case for the next couple of months, with the MPC's focus shifting from the base rate to quantitative easing.

But he adds: "While it is difficult to be confident how long bank rate will stay at 0.5%, it is likely than when the MPC starts increasing base rate it will move up quite quickly.

"This could be very uncomfortable for anyone still locked into a variable rate mortgage at that time, especially borrowers whose mortgage payment comfort zone has migrated to their current low payments."

While Adrian Coles, director-general of the Building Societies Association, says:

“The Bank’s interest rate decision is no surprise. While hard pressed savers should see interest rates maintained, this decision does nothing to help lenders to attract new deposits that could be used to fund mortgage lending.

“With the general economic outlook remaining bleak, we hope that the expansion of the quantitative easing programme will help to lessen the severity of the downturn.”

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Posted 07/05/2009 12:53:45