Bank of England holds rates as predicted

The Bank also made no further addition to its £375bn quantitative easing scheme.

Base rates have now been at 0.5% since March 2007.

Commenting, Jeremy Duncombe, director at Legal & General Mortgage Club, said: “Despite the MPC’s decision not to increase interest rates this month speculation around the future trajectory of base rate continues.

“At the moment many commentators believe that we are likely to see a rise in 2015. However, borrowers should not be complacent.

“The reality is that lenders will price in a base rate increase well in advance of any decision and therefore the historically low rates we have seen in recent times are not set to last.

“Borrowers should look at their options and where possible seek advice to tie down a more favourable deal while they still can.

“A rise of just 0.5% on a mortgage for a property worth the UK average of £150k could see minimum repayments rise by as much as £750 per year which may cause problems for homeowners on already stretched budgets.”

Barry Naisbitt, chief economist at Santander UK, said: “Following the major change in the approach to monetary policy announced last August, the Monetary Policy Committee was not expected to do anything other than hold Bank Rate again this month.

“However, the decision was made against a background of continued positive economic news. The UK economy is estimated to have grown by 0.8% in the third quarter and the survey indicators of activity point to a strong performance in the final quarter of last year too.

“The unemployment rate has fallen faster than the MPC expected back in August and, at 7.4% in October, is approaching the 7% policy threshold quickly. At the same time, inflation has fallen back and at 2.1% in November is just a whisker away from the 2% target.

“This will give a degree of comfort to the MPC that it has scope to hold rates at their current level for some while longer. Next month’s Inflation Report and any changes that the MPC may make to its outlook for the economy are likely to be the next areas of focus.”