Interest Rate Update to 20 November 2010

UK Interest Rate: 0.5%

UK Interest Rates Forecast: No change likely until 2011/12

Three-Way Split In MPC Vote Suggests More QE

Bank of England MPC members were split three ways when they met at the start of October to decide whether to change the Bank Rate. Although the Bank Rate remained unchanged at 0.5%, MPC member Andrew Sentance voted again for an increase of 0.25% while Adam Posen voted for an expansion of the Bank's Quantitative Easing program – the means by which additional money is injected into the economy. This is what you and I would call 'printing money'.

In theory, such an expansion should help finance lending to businesses and individuals – including greater mortgage lending. Such a decision looks increasingly likely as Bank's Governor, Mervyn King, commented in a speech this week that the amount of money in the economy was "barely growing at all" – despite the previous injection of £200bn made by the Bank of England.

Mortgage Choices Continue To Improve

In the mortgage market, meanwhile, the range of choices and rates on offer to borrowers continue to improve – for those with a reasonable amount of equity in their homes, at least.

At least one major high street lender has cut its tracker rates in the last week and others are offering a wider range of products. One product that seems to be gaining in popularity is the lifetime tracker. Some very attractive lifetime tracker deals are currently available to borrowers with a large deposit or a reasonable amount of equity in their current house.