Retailers breathe sigh of relief after interest rates frozen
The Bank of England has voted to keep its key interest rate at 5.75 percent as expected, after a quarter-point increase in July.
Economists had been expecting the central bank to wait to gauge what impact five rate hikes in a year have had on the economy before making any more increases. The steady rate verdict is good news for Britain’s homeowners, who are already paying more to pay their mortgages than at any time in the last 15 years. Economists say it takes more than a year for higher borrowing costs to work their way through the system and the recently popularity of fixed-rate mortgages means this time-lag could be even longer.
Homeowners in the UK rushed to take out fixed-rate mortgages after interest rates were cut in August 2005 and around two million such deals are due to expire in the coming months.
This means households so far insulated from higher interest rates will be forced to absorb five rate hikes in one go.
