Every month we wait with baited breath for the decision by the Bank of England on whether to hold or adjust the base rate of interest.

The rate has such a major impact on many household finances that the monthly cycle seems to come around very quickly.

The benefit of such frequent reviews is felt largely by the Bank, but not by the typical mortgage holder, who feels the pressure every four weeks or so. And the impact is even more tense when the talk is about rates increasing rather than reducing. If rates increase then banks and mortgage companies are very quick to pass the increases through to their loan rates and mortgage rates. City analysts still expect one or two further increases in rates before they will start to feel more comfortable that rates wil stabilise for a while.

We reported recently on the introduction of some long fixed rate mortgage deals becoming available, with Nationwide offering a rate fixed for 25years. There are now well over 100 fixed rate mortgages available for periods of more than 10 years, with the best 10year fixed deal being offered by Cerbyshire Building Society at 5.25% (10.4.2007). The view on fixed rate mortgages of this length is that the whole UK financial landscape could change dramaticaly in that time and unless consumers really need that rate guarantee they should proceed cautiously. For example the UK could join the euro and see interest drop by one or two percentage points to fall in line with the rest of europe.

People with variable rate mortgages and loans will be relieved as each month at the moment there is talk of rates going up again.

Bank of England Interest Rates increased for third time in 6 months in January 2007 with the base rate increasing to 5.25%. Recent increases in inflation figures caused the bank to warn that yet further increases may be likely and experts are expecting the rate to rise again early in 2007. There are thoughts that rates should have been increased earlier in 2006 which may have offset the need for all the recent rises. Although many experts predict additional rises in 2007, the longer term outloook remains positive with possible reductions not that far away.