Interest rates held at 5.75%

The Bank of England has voted to keep interest rates at the present level of 5.75%. While this has been welcomed within the housing industry, many expect that an increase to 6% will still happen in the near future.

David Bexton, of SmartNewHomes.com, said: "The decision will come as a relief or the UK’s home owners following last month’s rise. However, with many predicting this year’s rate rises to reach 6% by the autumn, this month’s reprieve could be short lived."

Interest rates have gone up five times in the last year. The Monetary Policy Committee had been expected to keep rates on hold this month, at it waits to see the impact of previous rises.

According to the Council of Mortgage Lenders, one of the main reasons to keep interest rates on hold is that many people are reaching the end of their fixed rate mortgage deals.

Howard Archer from Global Insight said: "A substantial number of home owners will see their mortgage bills rise markedly during the second half of the year as the cheap fixed rate mortgages they took out two years ago expire."

The decision to hold interest rates at 5.75% has been widely welcomed, although the British Chamber of Commerce sounded a note of caution.

BCC economic advisor David Kern said: "We remain very concerned that the markets still expect an increase in rates later in the year. There are already signs that the housing market is softening. The slowdown in average earning growth strengthens further the case for waiting."

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