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BoE holds interest rates at 4.75

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Interest rates were held at 4.75 per cent this afternoon by the Bank of England's Monetary Policy Committee.

This is the sixth month in a row the Bank has voted for interest rates to stand at this level, the longest period of stability since February 2003 - when rates fell after 14 months of continuity.

The decision came as little surprise to analysts.

Of the 106 economists polled by the news agencies Reuters, AFX and Bloomberg, 105 predicted interest rates would be kept on hold.

The decision to hold rates leaves the majority of mortgage-holders relieved.

Rises and falls in the base rate of borrowing directly impact the cost of mortgages in the UK, as the vast majority of lenders increase or decrease their own standard variable rate in line with action taken by the Monetary Policy Committee.

With only 17 per cent of UK householders on a fixed or capped rate mortgage, interest payments on a £100,000 mortgage rose by as much as £83 a month - equivalent to £1,000 a year - over the course of 2004, mortgage broker Charcol calculated.

And memory of these mortgage hikes has left the public at odds with the experts on the direction interest rates will take in the months ahead.

Lloyds TSB found that 70 per cent of the population expect interest rates to rise, while an increasing number of commentators are predicting rates will come down.

"There seems to be a strong view among consumers that interest rates are still on their way up, which is at odds with the market view," Lloyds TSB Scotland's Douglas Reid said.

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