Bank Interest rate held at 0.5%

Base rate remains at the historcial low of 0.5% again today. This is despite mounting evidence from the published meeting notes from the MPC that there is a shift towards a rate rise and we have seen the ECB being far more aggressive in their statements about more imminent rate rises- against which background the Euro shot up against the Dollar.

There seems to have been more potential borrowers asking about fixed rates – but frequently then decide for variable once they see the price; with 5 year money at say 3% plus margin this is a good rate by historical standards. However with base at 0.5% many still feel they can take a chance. There is certainly an argument for this given there remains lots of bad news to come through the economy/ the banks will not be opening their doors wide openm for some time and Public Sector job losses have only just started. As we have seen though with base at 0.5% and many banks charging far higher cost of funds/ credit card rates in the high teens etc- logic and expectation do not always translate into reality.

Indeed apart from the lucky few with low base rate trackers- a more realistic attitude might be’ if it can go wrong it will’ and thus its worth paying for some protection.

Example of swap rates;( subject to change daily etc)

1 year – 1.19%

2 year 1.90%

3 years 2.34%

5 years 3 %

7 year 3.44%

10 year 3.84%

Anything from 3 years to 10 years has got to look good value based on historical numbers.