Homeowners are likely to be disappointed that their mortgage rates will not be reduced this month, and director general of the Council of Mortgage Lenders, Michael Coogan, laments the Bank’s lack of action.

He said: “We understand the conflict between slowing economic growth and rising inflationary pressures, and the uncertainty over some of the data reflected in the split views of MPC members last month.

“However, the MPC had an opportunity to act to anticipate the worsening economic environment today, and it is disappointing that there has been no change.”

He believes the unchanged rate could add to the mortgage plight already being experienced by UK homeowners. “Mortgage and housing market conditions will remain challenging for the rest of this year, but the majority of existing borrowers are coping well. Anyone who is in financial difficulty, or thinks they may have a problem in the future, should contact their lender or a debt adviser,” he said.

Other experts agree that the decision will not have been an easy one for the MPC. Chief economist, Lloyds TSB Corporate Markets, Trevor Williams, said: “This decision must have been a tough call. The threat of a steeper than expected slowdown could easily have swayed the MPC to cut, but the very real prospect of accelerating inflation is likely to have been the deciding factor.

“The Bank of England is now likely to hold out until the economic picture becomes clearer. Before deciding to cut rates again, it will want more evidence that the economy is slowing; more understanding of the effects of its recent efforts to revive credit markets; and crucially, a better view of whether rising commodity prices are pushing up consumer price inflation.”

However, disappointment appears to be the most common reaction to the unchanged rate, particularly from the housing sector. Chief economist at the Royal Institution of Chartered Surveyors (RICS), Simon Rubinsohn, said: “RICS is disappointed that the MPC chose to leave the base rate on hold today.

“Housing transactions have collapsed, consumer confidence has sunk to its lowest level since 1992, the service sector appears close to stagnation according to the latest CIPS survey and the retail sector is under immense pressure.

“RICS believes that the Bank should cut the base rate to 4.5 per cent in June if there is no improvement in the data over the next month.”

Equity strategist at Barclays Stockbrokers, Henk Potts, appears confident that significant rate cuts will be introduced in the near future. He said: “Despite the upside risk to inflation, we expect the Bank of England to reduce interest rates gradually over the coming quarters, with rates finishing the year at 4.25 per cent.”

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