Rates freeze could provide relief for investors - commercial mortgages

20 July 2007

The Bank of England may hold off from raising rates again in spite of anticipation that they will soon hit six per cent, it has been suggested.

With new data suggesting that earnings increases and the house market are beginning to be subdued in the current financial climate, a growing number of analysts are breaking the mould and suggesting that rates may not rise again after all.

Any period of stability would be good news for those with commercial mortgages looking for stronger yields from their investments, and New Star chief economist Simon Ward has suggested that the Bank could take into account a number of new factors at its next meeting.

"Our MPC-ometer statistical model correctly predicted the 6-3 vote for a hike in July and currently suggests that the Committee will remain on hold at least until November, even assuming continued robust growth," Mr Ward noted.

"As well as the significant dissent at the July meeting, the model is influenced by low average earnings growth, the rise in the exchange rate and an expected further fall in headline CPI inflation," he added.
Others including the director general of the Council of Mortgage Lenders, Michael Coogan have also urged the Bank to consider financial pressures before raising rates again.