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Base Rate held by the Bank of England in August

Banking and Borrowing

Updated on 06 August 2015 | 1 Comment

Base Rate remains at 0.5% but one ratesetter votes for increase.

The Bank of England has frozen Base Rate at 0.5% at the August meeting of the Monetary Policy Committee (MPC).

However, a rise appears to be on the cards, with Governor Mark Carney indicating last month that a the first increase could happen around the turn of the year. However, he also emphasised that future rises will be slow, towards half the historical averages, meaning around 2%. Read more in Base Rate 'may rise by turn of the year' says Bank governor.

This possibility has been slightly increased by the fact that one member of the MPC – Ian McCafferty – actually voted for a rise of 25 basis points in August, although many experts predicted beforehand that at least two would vote for a rise. August was the first month where the minutes of the MPC meeting were published at the same time as the decision.

The improvement in the economy has made a rise much more likely, even though inflation remains at very low levels, with the latest Consumer Prices Index figure at 0%.

What it means for your money

With rates looking set to rise, now is a good time to take advantage of a fixed rate mortgage. According to financial data analysts Moneyfacts, average mortgage rates have already started moving upwards over the last month, so if you want to secure a cheap deal you should probably move quickly.

For the latest market-leading mortgages, read The best fixed rate mortgages and The best tracker mortgages.

The prospect of a rate rise is better news for savers, so locking your money up for a lengthy period may not be the best idea. Be sure to read Where to earn most interest on your cash for the latest rates across a range of savings accounts, ISAs and current accounts.

More from loveMONEY:

The best fixed rate mortgages

The best tracker mortgages

Where to earn most interest on your cash

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Comments

  • 06 August 2015

    Saw on the news yesterday that 30 of the cheapeast mortgage deals have already been yanked!

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