UK interest rates set for another freeze

Homeowners are set for another break from higher borrowing costs this week, experts predict.

Homeowners in Britain are set for another break from higher borrowing costs this week, experts predict.

The Bank of England’s Monetary Policy Committee (MPC) is likely to freeze interest rates at 4.75% on Thursday, where they have remained since last August’s quarter point rise.

A slowdown in the housing market and a dip in economic growth will be among the main factors influencing the decision, according to economists.

Data from mortgage lenders has pointed towards a continued weakness in house prices – with experts saying this increase the chances of a cut in rates in the coming months.

GDP figures have remained weak, while MPC may also take into account data suggesting a weaker manufacturing industry.

Philip Shaw at Investec Securities said: “We judge that unless real economy news is very strong, the committee would not want to risk a more abrupt downturn in the housing sector.”

Mr Shaw said he believed interest rates had now peaked and that the MPC was “very likely” to leave them on hold for the fifth consecutive month.

Jonathan Loynes at Capital Economics said that if downbeat news on the economy and the housing market continued, attention could soon turn to whether rates would be lowered.

He said he expected the first cut to come in May, but added that this could come sooner if the housing market keeps weakening.