The Bank of England has held base rate at 0.5% despite expectations of a possible hike.
The Bank of England has held base rate at 0.5% despite expectations of a possible hike.
The Monetary Policy Committee was split 7-2 with the majority voting to keep the base rate at the current level.
The announcement follows a decision from the Federal Reserve to increase the interest rate in the US.
Craig McKinlay, sales and marketing director at Kensington Mortgages, said: “A rate-rise was never really on the cards today, but all the signs point towards one in the near future. After just one rate rise since 2009, it’s all too easy to think the era of lower-interest rates will continue.
“However, the growing noise around a potential rise should act as a wake-up call for those borrowers who haven’t yet remortgaged to speak to a broker to secure a deal that is beneficial to them.”
Craig Inches, head of rates & cash at Royal London Asset Management thought not increasing the base rate was a missed opportunity and that there’s a 75% probability of rates rising in May.
He said: “Today’s decision not to raise rates was a missed opportunity in our opinion. With real wage growth moving into positive territory for the first time in over two years, strong retail sales (despite the adverse weather conditions) and some welcome progress on the Brexit negotiations, the uncertainty that has concerned the Bank in recent months is beginning to be demystified.
“The markets were warned in February that rates would rise ‘faster and sooner’, the question we’d ask is why the Bank thought it necessary to wait until May.
“The probability of a rate rise now stands at over 75% following the vote today, sterling has risen in recent weeks from £1.37 to £1.42 and gilt short gilt yields have risen to the highs of the year."
Inches added: “Given these moves and in light of the recent slew of positive data, the economy is clearly ready for a rate hike in May, but it would have been just as ready today!
“In the meantime the Bank continues to buy gilts via the APF facility and is massively distorting the shape of the yield curve, which is detrimental for pension funds and an accident waiting to happen further down the line.”
Ishaan Malhi, chief executive of online mortgage broker Trussle, added: “The Bank of England may have opted to sit tight today, but it's likely that they'll lift rates in the next couple of months. This would impact all consumers, but particularly home owners who'll see mortgage rates rise to their highest level in a decade.
“In fact, we've already seen many lenders increase their rates in recent months in anticipation of a rate rise. But borrowers are starting to react too. According to recent figures, the number of people remortgaging in January hit a nine-year high.
"However, today's focus on interest rates really only highlights half the story when it comes to mortgages.
“As lenders change the rates of their deals, many will change the attached fees and incentives too. It's important to take the total true cost into account, since a higher-rate deal can actually be cheaper overall than a low-rate deal.”
Prior to the announcement, the EY Item Club said that it expected two rate rises in 2018, increasing to 0.75% in May with another rise to 1% in November.
The next time the MPC meet to discuss the base rate is Thursday 10 May.
