The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009.
Had rates increased millions of borrowers would immediately have fallen under the cosh.
The average monthly payment on a £110,000 repayment mortgage at 3.50% is £556. Even a small 0.25% rate rise would add £15.20 to monthly repayments. And borrowers on interest only mortgage deals would see their payments rise £22.92 – from £320.83 to £343.75 per month.
L&G Investment management warned yesterday that nine out of ten borrowers would be hit by a sharp rise in rates.
While this morning housing charity Shelter warned that the equivalent of 2.8 million homeowners may be completely unprepared for the costs of rising interest rates based on their lack of awareness about where they are currently.
Ben Thompson, director, Mortgages at Legal & General, said: "This is getting really interesting now, has there ever been a time where industry experts have been so neatly split over a series of important economic decisions?
“The MPC could have chosen, and could still choose, to solely focus on hitting the inflation target. It is clear however that if this was the Bank’s only focus, the pain felt across much of the UK would be deepened and prolonged through higher borrowing costs.
“Our view remains that the risks from tightening policy too soon is potentially more dangerous than waiting patiently for the squeeze to actually hit consumers’ pockets directly, and erode spending power, leading to reduced inflationary prospects further down the line.
“It feels like a brave decision however to change tack now would send out a confusing and possibly panicked message. In time the decision will become more unanimous towards tightening and when that month arrives it should mean that the Bank feels we are making a sustained recovery.”
Jonathan Cornell, head of communications at First Active Finance, said although it was highly unlikely that the MPC was going to do anything other than keep the base rate on hold but warned that we are getting closer and closer to an increase.
He said: “Most experts predicting that the earliest we will see a rise is May which will coincide with the next quarterly in inflation report. The minutes for this meeting will be available on 23rd March and they will make fascinating reading.
“The stick on SVR or twist onto a fixed rate debate has been raging furiously. Borrowers should take into account their current lender’s previous track record with base rate cuts and increases. Not every lender passed on all the cuts and there is a lengthy list of shame of those lenders which previously increased their SVRs by more than the base rate increases. Those who don’t believe rates will rise significantly in the medium term should consider tracker rates as this removes the risk of SVR padding.”
And Richard Barker, mortgage manager at N&P, added: “Today’s decision to leave the Base Rate unchanged at 0.50% for the 24th consecutive month was largely expected within the markets and does not come as a huge surprise.
“Support for a base rate increase has been gathering momentum over the last few months in light of significant inflationary pressure, with three members of the MPC voting for a rate increase in February and other economic commentators also calling for an increase, but the relative fragility of the economy and weakness of the recovery is likely to have influenced the decision of the majority of the MPC members.
“Many economists anticipate that the first rise in Base Rate could now occur in May following the release of various economic data for the first quarter of the year. So for the moment, those on a variable rate or tracker mortgage have a little bit more time to consider their options.”
