The standard base interest rate set by the Bank of England’s Monetary Policy Committee (MPC) will have another month at 0.5%.  Meanwhile, the eurozone had also voted to stay their interest rate which will remain at 0.75%.  Policymakers in the UK are choosing to leave the rate low in the midst of warnings of a triple-dip recession.

The fear of another recession is based upon the possibility that the last quarter of 2012 may have failed to keep the economy above the recession level.  Reports of the dominant services sector contracting for the first time in two years in December has led to a concerned watch.  The MPC also chose to leave the quantitative easing (QE) at its current programme level of £375 billion.  However, should a recession emerge once more it is likely further QE will be approved by the MPC.

The current interest rate of 0.5% has held since March 2009.  Despite the level of the Bank’s rate, lenders have fluctuated on offers to borrowers based upon their own lending costs.  Currently there is a hope that the Funding for Lending Scheme put into place last August is having a positive impact on mortgage and remortgage loans.  A survey released by the Bank showed that lenders intend to increase their lending and to maintain low interest rate levels in the first quarter of the year.

There is also an expectation of the return of more first time home buyers to the housing market which would seem possible with low interest rates, an ease in lending, and more affordable house prices.  This would help thaw the frozen property ladder and as property values stabilized then homeowners could seek remortgages with better equity levels.