Interest rates frozen

It has been announced that interest rates will be locked at 5.25 per cent for the second consecutive month.

The decision had been widely anticipated by economists, although experts have warned that we have not yet hit the peak rate, so another hike is still likely in coming months.

The Bank of England recently implied that a rate rise would be on the cards to keep inflation around its overall target of two per cent, but pressure this month eased as the Consumer Prices Index saw its steepest decline since January 2003.

"Today's decision seems reasonable in light of economic developments over the past month," said George Buckley, economist at Deutsche Bank. "Stronger data and more stable markets are probably needed for further tightening."

Paul Smith, of haart estate agents, commented on what the effects might be for the housing market across Great Britain and Northern Ireland. He said: "House prices have stabilised and buyers have sensibly become wary about over-stretching their borrowing capacity."

Yet he believes that solicitors could be seeing more first time buyers in their offices as a result of the freeze. He speculated: "Holding the interest rates will help to reinstate consumer confidence and is particularly good news for first time buyers who are already struggling to get on the property ladder."

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