Bank opts to hold rates in September - commercial mortgages

06 September 2007

The Bank of England has announced that it has held the base rate of interest at 5.75 per cent for September, with borrowers likely to be encouraged by long term forecasts.

Those with commercial mortgages and other deals could now see a period of extended constancy as the Bank waits to see what the effects of the current financial market turmoil will be, observers predict.

Some, including Howard Archer of Global Insight, are now of the opinion that the next change to the base rate will see the cost of borrowing scaled back.

"We believe that the eventual next move in interest rates is now more likely to be down rather than up, although we currently do not expect the Bank of England to act until well into 2008," Mr Archer commented.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, did however caution that the market turmoil could have an impact on the housing sector over the next few months.