Bank’s decision could cost mortgage holders

Posted 2008-01-2

The Bank of England decided to hold base rates in January 2008, a decision that could prove more expensive for mortgage owners. Many industry experts believed a base rate cut to be justifiable this month, moreover, due to negative economic statistics most expected a rate cut.  John Charcol’s Ray Boulger said:

“Homeowners could find themselves paying £105 more in interest than they would if a 0.25% cut had been implemented.”

Inflationary pressures such as Npower’s 17% price increase could prove financially difficult for Britons. However, inflation is under control with the consumer price index inflation just above the 2%, with the global economic slowdown likely to bring it down further.  With regards to further rate cuts, Boulger added:

“If the monetary policy committee delays the next cut too long, Bank rate may have to fall further than would have been the case with an earlier cut.”

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