CHEAP mortgage deals are set to stay after the Bank of England yesterday signalled interest rates will not rise.
Governor Mark Carney has forecast that the base rate is unlikely to change from its current record low of 0.5 per cent.
The announcement will be welcomed by millions of homeowners looking to remortgage.
But it also means savers will have to endure paltry returns on their investments.
Tumbling oil prices and the economic instability of China are thought to be behind Mr Carney’s prediction.
Many experts believe rates will stay low for years. In a speech at Queen Mary University of London, Mr Carney said “now is not yet the time” to increase rates.
“The journey towards higher rates doesn’t have a set timetable,” he added.
He also said inflation will take longer to reach the Bank’s two per cent target.
“Due to the oil price collapse, inflation has fallen further and will likely remain very low for longer. The world is weaker and UK growth has slowed, ” he said.
His comments came as data yesterday showed that annual inflation stood at 0.2 per cent.
David Lamb, from currency dealer Fexco, said: “The prospect of a UK interest rate rise hasn’t been kicked into the long grass.
“The governor has hoofed it right out of the park.
“Mark Carney’s prediction – made last summer – that we would have greater clarity on interest rates at the start of 2016 has been completely overtaken by events.
“Six months on, the prospects for UK interest rates remain as clear as mud.”
And Howard Archer, chief economist at IHS Global Insight, said a rise in interest rates was now unlikely until the end of this year at the very earliest, or even next year.
“Given Mark Carney’s cautious tone and the increased possibility that consumer prices will stay lower for longer due to oil price weakness and limited earnings growth, it is clear the Bank of England could well delay acting until very late on in 2016, or even 2017,” he said.
Calum Bennie, savings expert at Scottish Friendly, said: “Mark Carney has now sealed his reputation as the boy who cried wolf. Over the last few weeks it’s been increasingly clear that his threat last summer to raise interest rates at the start of the year was an unrealistic and unrealisable one.
“Now Mr Carney, in confirming there is to be no immediate rise in rates due to the gloomy global economic situation, has at last injected some pragmatism.
“Savers must be prepared for a longer than anticipated period of rock bottom rates and as a result should be considering stocks and shares ISAs, which offer the potential for long-term growth, although risk is attached.”
Property values have hit another record high after soaring £17,000 in one year, figures revealed yesterday.
House prices in November rose at the fastest annual rate than at any time since March, rising 7.7 per cent year-onyear.
The hike pushes the average cost of a home in the UK up to £288,000.