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<\/p>\nMILLIONS of households can breathe another sigh of relief as interest rates remain unchanged for the second time in a row.<\/p>\n
The\u00a0Bank of England's Monetary Policy Committee (MPC) has opted to hold the current base rate at 5.25%.<\/p>\n
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Six members of the nine-person MPC voted to keep the Bank of England's base interest rate unchanged at 5.25%, but three voted to raise it to 5.5%.<\/p>\n
The Bank of England's documents said for the first time that its "monetary policy is likely to need to be restrictive for an extended period of time" – meaning that rates will be high for longer.\u00a0<\/p>\n
Figures this week showed that the number of households remortgaging had fallen to the lowest level since 1998 as they have been holding off in the hope that rates will soon fall.\u00a0<\/p>\n
The Bank has justified keeping rates for longer because it feels inflation and private sector weekly wage increase growth, at 8%, is still too high.<\/p>\n
Inflation is expected to fall to 4.8% in October, largely due to cheaper energy costs, but this is still more than double the Bank's 2% target.<\/p>\n The\u00a0UK's rate of inflation remained at 6.7%\u00a0in September.<\/p>\n Easing\u00a0food and drink\u00a0price rises were balanced out by higher petrol and\u00a0diesel\u00a0prices for motorists.<\/p>\n Governor Andrew Bailey said: "Higher interest rates are working and inflation is falling. But we need to see inflation continuing to fall all the way to our 2% target.<\/p>\n <\/span><\/p>\n <\/span><\/p>\n <\/span><\/p>\n <\/span><\/p>\n "We've held rates unchanged this month, but we\u2019ll be watching closely to see if further rate increases are needed. It's much too early to be thinking about rate cuts."<\/p>\n The\u00a0BoE\u00a0base rate is often used by high street banks to set the rates they offer to customers on things like loans, savings and\u00a0mortgages.<\/p>\n So higher interest rates are painful for British households, companies and the government because it makes debt repayments and mortgage bills more expensive.<\/p>\n In August, it lifted the\u00a0base rate\u00a0by 0.25 percentage points\u00a0from 5% to 5.25%.<\/p>\n And today marked the second time since December 2021 that the central bank has voted not to raise rates.<\/p>\n The Bank's signalling of a long period of high rates comes despite its own forecasts predicting the economy will have no growth next<\/span> year, barely any growth in 2025 and only returning to growth above 1% in 2026.<\/p>\n Experts previously predicted that the\u00a0Bank of England\u00a0would avoid another interest rate rise.<\/p>\n Chancellor Jeremy Hunt said: "Inflation is falling, wages are rising and the economy is growing.<\/p>\n "The UK has been far more resilient than many expected, but the best way to deliver prosperity is through sustainable growth.<\/p>\n "The Autumn Statement will set out how we will boost economic growth by unlocking private investment, getting more Brits back to work, and delivering a more productive British state."<\/p>\n Below we reveal more about what the rate pause means for your\u00a0money.<\/p>\n Usually, if rates rise it means that mortgage\u00a0bills, depending on the type you have, will increase.<\/p>\n Those on a fixed-rate deal tend to be safe for now until they remortgage.<\/p>\n But other\u00a0mortgages, such as a tracker or standard variable rate (SVR) mortgage, can be impacted straight away.<\/p>\n Homeowners on variable-rate mortgages might not see their repayments go up straight away, but they will likely increase shortly after interest rates are hiked.<\/p>\n The exact amount depends on your borrowing and your loan-to-value.<\/p>\n However, because the BoE has opted to freeze current rates, your lender may opt to do nothing at all.<\/p>\n This will come as a huge relief to those who have faced 14 consecutive increases to their mortgage bill.<\/p>\n Either way your bank should warn you of any increase to your rate before it goes up.<\/p>\n Myron Jobson, senior personal finance analyst at Interactive Investor, said: "A hold in interest rate is good news for the 2.2 million homeowners on variable rate mortgages who have been on a swashbuckling ride during the cycle of 14 consecutive interest rate hikes which saw their monthly repayment obligations balloon.<\/p>\n "It would mean that their interest payments will remain stable, which can be a relief.<\/p>\n "A hold in the Bank of England's benchmark rate could also bode well for those in the market for a mortgage.<\/p>\n "Lenders have steadily reduced rates on their fixed mortgage deals since July in the wake of an improved inflation outlook."<\/p>\n We've got more info on\u00a0how to find the best mortgage rate deal\u00a0here.<\/p>\n Again the cost of borrowing through loans,\u00a0credit cards\u00a0and overdrafts can go up if the base rate is hiked, as banks are likely to pass on the increased rate.<\/p>\n Certain loans you already have like a personal loan or car financing will usually stay the same anyway, as you've already agreed on the rate.<\/p>\n But rates for any future<\/span> loan could be higher, and lenders could increase the rate on credit cards and overdrafts – although they must let you know beforehand.<\/p>\n Because of the rate pause though, nothing is likely to change for now.<\/p>\n However, you can still cancel a credit card if you want and will have 60 days to pay off any outstanding balance.<\/p>\n Myron said: "Those with high levels of debt should consider what they can do now to reduce their debts as the cost of credit is rising just as the prices of everyday essentials are flying.<\/p>\n "It is worth consulting a debt advice charity such as StepChange or Turn2Us and they will go through all of your options."<\/p>\n Savers are the main group to have actually benefited after the last 14 rate rises.<\/p>\n That's because banks tend to battle it out by offering market-leading\u00a0interest rates.<\/p>\n Although banks are usually much slower to act than with passing on higher rates for borrowing.<\/p>\n Of course, because the rate will not be changing for the time being, banks will likely take advantage and keep their rates the same too.<\/p>\n![](\"https:\/\/www.thesun.co.uk\/wp-content\/uploads\/2023\/04\/wide-angle-image-depicting-senior-775870307-1.jpg\")
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