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Interest rates held at five per cent

The Bank of England has held interest rates at five per cent, following last month’s 0.25 per cent increase.

Many commentators had predicted a stable interest-rate environment in December but expect a quarter-point rise early next year.

Allianc e & Leicester head of intermediary mortgages Mehrdad Yousefi says: “As expected, the Bank of England has maintained interest rates at 5 per cent even though the UK economy has been very buoyant, with strong activity particularly evident in the housing market despite the recent rate rises.

“Most commentators still believe there is a likelihood of an interest rate rise sometime in early 2007. However, the sharp fall in the US Dollar and the unexpected downturn in manufacturing statistics have probably been responsible for no movement in rates this month.”

“Despite two recent rate rises, there are some competitive fixed rates and trackers available for borrowers. For the more cautious, opting for a fixed rate makes sense especially as a further base rate rise may be around the corner.”

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