- 16
- Apr
Earlier this month, the Bank of England’s monetary policy committee (MPC) voted to maintain the base rate at 5.25 per cent, good news for anyone looking to secure a cheap personal loan in the coming weeks.
However, people considering taking out a personal loan, to benefit from an interest rate that could be lower thanks to the decision to freeze rates, have been forewarned by many leading experts that the 5.25 per cent Bank of England base rate is unlikely to remain the same through the summer months.
"Worries over firms raising prices and the modest extent of the slowdown in the housing market make another interest rate increase in the coming months likely," the Royal Institution of Chartered Surveyors (Rics) said, in response to the decision.
"The recent surge in oil prices threatens to create further energy related inflation pressure which may drive up the interest rate as well."
It would seem that the mitigating factors are uniting to make an interest rate rise likely sooner rather than later, which could spell the end for current cheap personal loan availability. However, many economists and experts felt that April’s decision was in line with expectations, following March’s 8-1 decision in favour of holding the base rate at 5.25 per cent.
"Last month’s meeting resulted in an 8-1 vote for a rate hold, so a swing back the other way may have been a bit too much to expect," Lloyds TSB said, also alerting those looking for a cheap personal loan that a "very different picture indeed" could be seen in the near future, again indicating the likelihood of a base rate rise in the near future.
There was even one vote for interest rates to be cut in March, but it seems very unlikely that this will become the overwhelming idea of the MPC in the near future, with some predicting that whether it is in May or not, the base rate will reach 5.5 per cent by the time the year ends.
Whether this will be in May is another matter up for debate among economists and experts, with some providing hope for anyone seeking a personal loans at a competitive rate that the end is not necessarily nigh for the 5.25 per cent Bank of England base rate.
"This decision will be seen by many as the postponement of a move next month," said RLAM economist Ian Kernohan. "However, I do not feel that the case for another hike is as compelling as many commentators seem to think: wage behaviour remains moderate, economic activity is slowing and the annual rate of inflation is about to fall rapidly, thanks to reductions in utility bills."
Indeed, some have even congratulated on the decision the MPC has made, arguing that something such as an interest rate rise does not have an immediate impact and that changes over the last few months will not have an impact until a certain amount of time has passed.
"It can take some time, often years, to see the full effect of a single interest rate rise, so holding on gives a chance for the impact of past rate increases to start showing through," Lloyds TSB said.
What seems most likely is that the interest rate will rise before the year is out, with experts implying that too many of the factors that influence the decision, including inflation and house prices, pointing to the need for a rise.
By acting soon and securing a personal loans at a competitive rate, consumers can make sure they strike before the MPC decides to push the Bank of England base rate higher.
Interfinancial providing you with breaking personal Loans news.
