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Interest Rate jumps again by 0.25%

(November 2006) The Bank of England decided this month to add an additional quarter per cent to its base rate of interest, taking the rate to 5%. The bank's monetary policy committee voted seven to two one in favour of the increase subsequent minutes have shown.

The committee deemed that the previous similar rise in october had not had the desired effect.

The fact that two members voted against the increase has cast doubts on the certainty of another rise early next year. The committee's notes cited falling gas and electricity prices and a weak labour market as valied reasons for keeping rates stable.

However the committee's concern over controlling inflation was the overriding factor in approving the increase.

More Interest Rate News

Bank holds interest rates at 4.75 per cent - 8th September 2006

Bank announces surprise interest rates rise - 3rd August 2006

Interest Rate History

We thought it would be interesting to look back at historical interest rates and see what's been happening over recent years. Current stability at 4.5% for the bank of england base rate is not unusual. Back in 2000 the rate stayed at 6% for almost the whole year and in 2002 the rate didn't changed from 4%. Looking back over the last 17 years the highest rate has been 15% in 1989 whereas the lowest was fairly recently in 2003 when rates dropped to a low of 3.3%.

Mortgage Interest Rates

Having looked at the changes in the base rate of interest over recent years you would expect mortgage interest rates to make similar reading, but there is an important difference. We've looked at the Standard Variable Rate (SVR) reported by Halifax. Back in the mid-nineties their SVR was between 1.2% and 1.4% higher than the Bank of England base rate. Now, however, the rate is consistently 2% higher - an indication, we think, that the building societies are no longer regarding their SVR to be their day to day normal mortgage interest rate. So, as we've said many times over, if your mortgage is running on your lenders SVR then do something quickly - you're wasting your money!