Interest rates kept on hold

5 April 2007

Your mortgage repayments shouldn’t go up this month – because the Bank of England has voted to leave interest rates on hold at 5.25% for the second month in a row.

But borrowers shouldn’t start celebrating, because many experts predict that rates will go up again in May – to 5.5%.  That’s because recent economic data has shown that inflation is still edging up, and it’s well above the Government’s target of 2%.

Last month, inflation rose from 2.7% to 2.8%.  And other data for March showed that annual house price inflation in the UK was running close to 10%.

But while many economists predict that interest rates will reach 5.5% later this year, they don’t expect them to rise any further.  Howard Archer of Global Economics said:  “We believe that 5.5% should mark the peak in interest rates as growth loses a little momentum over the coming months and inflation heads markedly lower, helped by the trimming of utility prices.”