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 £200 billion financed by the issuance of central bank reserves.

The Committee expects the announced programme to 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 programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The most recent change in the size of that programme was an increase of £25 billion to a total of £200 billion on 5 November 2009.

Ben Thompson, Legal & General's Director of Mortgages commented: "The remortgage market is actually showing early signs of warming up, but it won't really get going until the bank base rate is increased.

"When this happens, borrowers that are able to move around are going to start doing so quickly, creating havoc with lenders' back books. We think that ‘locking the back door' is something that lenders should be thinking about far in advance and ought to be preparing their retention strategies already. We would encourage lenders to work with brokers to ensure a cost-effective solution for all parties. We would also encourage brokers to start reviewing their books, identifying people on standard variable rates without tie-ins and making lists of prospects to call when the time is right."