UK interest rates held at 0.5%

The Bank of England's Monetary Policy Committee today voted to maintain interest rates at 0.5%.

The Committee also voted to continue with its programme of asset purchases totalling £125 billion financed by the issuance of central bank reserves.

The Committee expects that the announced programme will take another two months to complete. The scale of the programme will be kept under review.

The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009. A £75 billion programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The programme was increased to a total of £125 billion on 7 May 2009.

Ben Thompson, Director, Mortgages at Legal & General commented: "The steady Eddie approach seems to be the right course of action at the moment. A number of fixed rates may well have bottomed out now, suggesting that the markets have made their minds up about which way rates are headed next. New tracker borrowers could well be taking a bit of a gamble, especially with the margins that are now being built in. Those on an SVR may well be thinking that their rate is too good to be true, and they'd be right. The issue is that only some of those borrowers can do much about it. There will be thousands who don't have enough equity in their homes to make them enticing enough for lenders to tempt them away with remortgage deals."

"The housing market is not properly recovering yet - buyer enquiries do not mean sales. But when it does it is likely to split into a two-speed recovery with areas where there is a high level of supply of housing stock, low quality and high unemployment or risk of unemployment being the slowest to show any sign of improvement. Other areas could bounce back quite quickly assuming lending doesn't remain constrained."