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Property loan rates to stand still

8 December 2004

The Bank of England is set to leave interest rates on hold in December, according to economists.

There have been five interest rate hikes since last November, adding ten per cent to the monthly repayment on a £100,000 mortgage according to HBOS, but rates have been on hold at a three-year high of 4.75 per cent since August.

Every analyst asked by both Reuters and Bloomberg said that they believed the Bank's interest rate setting Monetary Policy Committee would do nothing to change this when it meets on Thursday.

"I am as close to certain as it is possible to be in these matters that the UK [base] rate will be left on hold at 4.75 per cent at next week's meeting of the Monetary Policy Committee," said Royal Bank of Scotland group chief economist, Jeremy Peat.

Analysts in general were less certain of future rates, with 20 forecasting that interest rates would fall and 23 suggesting that there is one more rise to come.

"The big question is what happens next ... it is certainly a distinct possibility that [base] rate is now at its peak. However [if certain data does not alter] one further rate hike around August next year looks likely. That would take rates to a peak of just five per cent," he added.