The Bank of England has decided to keep interest rates at a record low of 0.5% but warned of the potential risk to economic activity following a Brexit vote.
Members of the Bank’s Monetary Policy Committee voted by 9-0 to maintain interest rates at the current level, despite a 0.5% inflation rise in March.
However, there could be an “extended period of uncertainty about the economic outlook” if Britain decides to leave the European Union.
The Monetary Policy Committee said in its minutes: “A vote to leave could have significant implications for asset prices, in particular the exchange rate.
“Ultimately, monetary policy would be set in order to meet the inflation target, while also ensuring that inflation expectations remained anchored. Whatever the outcome of the referendum, the MPC would use its tools to achieve its inflation remit.”
Jeremy Duncombe, director Legal & General Mortgage Club, said: “Today’s result reinforces earlier predictions that interest rates are likely to remain at record-low levels until next year. Whilst this is good news for many homeowners, it is vital that potential borrowers and those looking to remortgage do not get complacent about these rock-bottom rates.
“The temptation to delay looking at new mortgage deals should be ignored, as mortgage rates are not directly linked to base rates. Anyone who is thinking about re-mortgaging should therefore speak to a broker now to find out about the best product for their individual circumstances, before these deals disappear.”
Matt Andrews, managing director of Bluestone Mortgages, said the continued low-rate environment could provide a good opportunity to secure favourable loan rates whilst they were still available.
“However, there still remains a significant portion of the UK workforce who struggle to access lending due to their complex financial circumstances. This includes self-employed customers and contractors with inconsistent cash flows, or limited trading history, as well as customers with adverse credit histories who tend to fall outside of conventional credit scoring models,” said Andrews.
“These borrowers require a deeper underwriting experience to ensure the nature of their situation is fully understood. Innovation in lending is absolutely needed to cater to this sector of the market, however, a balance must be struck between automated technology, and intelligent technology. To ensure a consumer’s individual circumstances are taken into account, and lending decisions are made on a case by case basis, technology in the mortgage market needs to retain its human touch,” he added.
