Interest rates held at 0.5 per cent for 25th month
As Bank of England policymakers keep interest rates on hold again, a victim of the Northern Rock collapse tells Channel 4 News “I would be very frightened if I had a mortgage now”.
Interest rates have been kept at their record low of 0.5 per cent as Bank of England policymakers resist pressure to curb rising inflation.
The no-change decision means the Bank’s base rate has not changed for 25 months.
But with inflation running at 4.4 per cent, the Bank of England risks damaging its credibility by failing to take action over price pressures.
Three members of the nine-strong monetary policy committee voted to increase rates last month but the majority of policymakers expect inflation to peak at 5 per cent before heading back to its 2 per cent target next year.
Read more: Interest rate relief for homeowners but for how long?
Analysts think there is a much greater chance that interest rates will rise in May as members will have access to the Bank’s latest economic forecasts.
‘I’m struggling to keep a balance, not just for a rainy day’
John Vickery, 71, lives in Durham with his wife Denise. He retired from the civil service in 2000 but despite his pension he told Channel 4 News he constantly worries about interest rates and his savings. He said it is “unsustainable for anyone keeping any money in a current account”.
Mr Vickery was hit by the collapse of Northern Rock in 2007.
He explained: “I had shares in Northern Rock and took a tremendous dive when that went. I really didn’t know what to do. All that money was wiped out.”
I would be very frightened if I had a mortgage now – worrying about the bank rate and if it’s going to skyrocket again. John Vickery
He also said that the record run of low interest rates caused him to change his current account for the first time in many years from one high street bank to another that was offering £100 incentive.
He said: “I’d been a loyal investor for a long time in my current account – but last month I thought ‘I’m not getting anything out of this’.
“Borrowers seem to be getting away with lots, there’s not much around for savers.”
But Mr Vickery added: “I would be very frightened if I had a mortgage now – worrying about the bank rate and if it’s going to skyrocket again.”
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Your reaction on Facebook and Twitter:
Emma Salter A smidgen of a rise WOULD make a difference to us savers.I was paying 8 per cent interest on my mortgage in the mid 90s.Now that I've paid it off and I have savings, the interest rates have dropped. GRRRR.
@briwebb Time to raise the rates. Savers punished past 2 years while debtors rewarded. Latter got us in this mess.
Cayte Robinson home owner with tracker mortgage. Don't raise them! But have retired parents who need to make money on their savings.. so raise them! arghghgh.. either way, people lose out!!
@grrrth Bank of England keeps interest rates on hold at 0.5% Woot! Next month my fixed rate mortgage ends. Woot!!
Stewart Lawson They're kept down to keep mortgage payments dirt cheap - tis time these people with the "disposable" income start paying more than cheap rent rates for a 5 bedroom house and get this inflation stopped.
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