UK interest rates kept at 0.5%

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

The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.

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

Ben Thompson, Director, Legal & General Mortgages said: "There's been a notable shift in popularity towards tracker rates as expectations of a long period of low interest rates become entrenched amongst borrowers.

"Our figures show that almost one in five mortgages applied for through our Mortgage Club were tracker rates, up from 12% in the previous quarter, and we expect this figure to rise by the end of the year.

"The most recent interest rate cycle peaked in July 2007 at 5.75% and since then the popularity of trackers surged at the end of 2007 and remained relatively high throughout most of 2008. However, greater margins were built in by lenders when the big cuts were made by the Bank of England from October last year, and products were withdrawn very frequently. This lead to a big drop in the number of trackers being taken, a low point from which we are only just recovering. We expect the MPC to hold interest rates steady for some time but rises are inevitable, so borrowers must be prepared. In the words of George Osborne, we're all in this together."