Mortgage hope for homeowners

Published on Sunday 1 May 2011 16:49

Homeowners are set to be given another reprieve this week as policymakers are expected to keep interest rates on hold following Britain's lacklustre first-quarter economic performance.

Experts believe the latest set of gross domestic product figures - showing a tepid 0.5 per cent rise between January and March - have killed off any chance of a rate hike in May.

Until a few months ago, the Bank of England's monetary policy committee had been widely expected to increase the cost of borrowing from record lows this month to rein in inflation.

But expectations for a rate rise have been pushed back until the late summer after data showed an underwhelming rebound after the shock fourth-quarter decline, while inflation figures also revealed a bigger-than-expected fall.

The MPC will have a preview of the latest quarterly Bank forecast, which is due out on 11 May and will offer predictions on GDP and inflation.

Allan Monks, economist at JP Morgan, said: "The MPC remains understandably cautious about growth, given the drags in place from falling real incomes, fiscal tightening and weakening household confidence. We therefore see a rate increase as unlikely."