For the first time since May last year, all nine members were unanimous in voting for no movement in base rate.
The global downturn, slow UK economic growth and expectations that inflation will fall in the medium term make it increasingly likely that interest rates will not rise until well into next year.
Meanwhile, lenders are busy slashing the pricing of their fixed rate mortgages.
Falling money market rates and a danger of lenders missing end-of-year lending targets is resulting in some of the cheapest fixed rate mortgages, ever.
There are now several five-year fixes available at less than 4% for those with significant equity – 25% to 35% – in their homes or a similar level of deposit.
Coventry Building Society is the latest lender to join the ranks of sub-4% five-year fixes, launching a five-year deal via brokers pegged at 3.49% for those with a 35% deposit and £999 fee.
For those who would pay a lower fee, there is a slightly higher rate of 3.60% with a £199 fee.
While this is great news for borrowers, it may present a bit of a quandary.
Is it wise to opt for the security of a cheap fixed rate, even though the threat of an interest rate rise seems to have rescinded for now?
Or should you hold fire for a bit in the hope that fixed rates will get cheaper still? How low can they go?
Much depends on individual circumstances. If a client wants to know what their monthly mortgage payments will be to help with budgeting, then a fixed rate makes sense.
Given that these are some of the cheapest fixed rates we have ever seen, they won’t go far wrong in securing one now rather than waiting in the hope that they will fall further.
Those borrowers on some of the cheapest standard variable rates (SVRs) or trackers may feel that it is worth the risk in staying put for now while interest rates are low.
It may mean paying more for a fix when interest rates start to rise, but borrowers on the cheapest rates could cope with several quarter-point increases in base rate before they would be worse off than if they had opted for a fix.
However, those on the more expensive SVRs – around 6% – may as well consider remortgaging. The rate they are paying will not fall and they may well be able to secure a cheaper fixed rate, particularly if they have a healthy level of equity in their homes.
Although static interest rates are a nice problem for borrowers to have, clearly advice is more crucial than ever.
Melanie Bien is director of Private Finance
