Interest rates have been maintained at 5.25% following the monthly meeting by the Bank of England's Monetary Policy Committee.
The last change in interest rates occurred on 11 January when the MPC unexpectedly decided to raise it by 0.25%, catching many in the industry unawares as a rise in the base rate was not expected so close to the previous increase in November 2006.
The City was last month caught off-guard when it was revealed one member of the nine-strong committee wanted a cut in interest rates to 5%, while the remainder of the MPC wanted to keep rates steady.
At the meeting in March, David Blanchflower had argued a cut was possible as there was considerable evidence of spare capacity in the labour market and wage pressures were benign.
Stephen Leonard, director of mortgages at Alliance & Leicester, says while the general consensus within the industry pointed to the base rate staying the same this month, many now expect a hike in May.
He adds: “The money markets have been pricing in at least one rise in the base rate this quarter, with rates potentially being cut later in 2007, or in 2008, as inflation drops back towards the MPC target of 2%.”
Meanwhile Nicholas Leeming, director of propertyfinder.com, says confidence in the housing market is still relatively strong, but there are already signs of a slowdown, as after three rises since the summer, buyers are increasingly sensitive to interest rates.
And he adds: “The coming introduction of Home Investment Packs (HIPs) may cause some disruption to the market, and a further hike today would have been ill timed to say the least.”
The minutes of today’s MPC meeting will be published at 9.30am on Wednesday 18 April.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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