This move is firmly in line with mounting industry speculation. However some did doubt whether the rate would stick for a further month after the US Federal Reserve cut American interest rates for only the second time in the last four years.
However the most recent survey conducted by Pink Home Loans revealed than an overwhelming 95 per cent of brokers were of the opinion that rates would stick once more.
Andy Pratt, chief operations officer at Alexander Hall, said that whilst he was hoping for a November rate cut, the next realistic point for such an adjustment will be in the new year as making any form of reduction in December is like waving a red rag to a bull.
Now we are seeing rates regain some of their former stability in response to the volatility in the financial markets, there is only an exceedingly slim chance that when the MPC make their next rate adjustment it will be an increase to 6 per cent.
Instead most believe that 2008 will see them drop back down to 5.5 per cent, with Pratt forecasting that by the end of the year they will be stable once more at 5.25 per cent.
Richard Donnell believes people should not underestimate just how cautious the MPC are in their rate adjustments. “After consecutive rate increases over such a long period, the MPC will not make a hasty decision,” he said.
“I would expect them to stick with the current rate of 5.75 per cent until at least the first quarter of 2008 to see exactly what will happen in the financial markets.”
Legal & General has compiled a list showing the months in which most rate changes have taken place. November came top with 6 changes in the last ten years occuring on the first Thursday, whilst February came second with five. If Donnell is to be proved right, these statistics point to February as the likeliest month for the anticipated cut to 5.5 per cent.
Trevor Williams, chief economist at Cheltenham & Gloucester said: “Although it is true that economic growth may have peaked in the last quarter and is slowing in the current one, there is still some way to go before the MPC would need to wield the knife on base rates. And with money supply still growing, strong labour market conditions and continuing robust economic growth, today was clearly not the day for a cut.
"Equally, with early signs that the economy is set to weaken in 2008 and price inflation still comfortably below target, the Bank was never really likely to raise rates. The next move will almost certainly be down, but it’s safe to say there won’t be any change until February at the earliest."
David Kuo of Fool.co.uk has urged homeowners not to look to the Bank for guidance: "While the Bank of England has adopted and wait-and-see approach, we should not be tempted into playing the same waiting game because lenders aren’t.
“Lenders are marching to the beat of a different drummer. High street banks are adopting a cautious approach, and it’s worth bearing in mind that he who pays the piper calls the tune.”
Brian Murphy, head of lending at Mortgage Advice Bureau said: “A decision of ‘no change’ by the MPC today is hardly surprising. Inflation figures from last month were in line with those from September, suggesting that the MPC’s primary consideration is back in control.
“However, with continuing market volatility I would expect the MPC to continue to err on the side of caution and hold rates until the New Year. While holding the base rate does not offer any immediate relief for borrowers, hope is offered by decreasing swap rates. With reductions to these rates there is more opportunity for lenders to offer competitive products for borrowers completing in the New Year.”
