It was only six months ago when those individuals with personal loans and mortgages were enjoying the benefits of the Bank of England cutting the base rate of interest.

Between December 2007 and April this year the base rate was cut on three occasions by a quarter of a per cent each time, from 5.75% to 5.00% and the financial news was full of reports of interest rates falling further, with the prospect of the base rate reaching as low as 4%, or possibly even lower by the end of this year, which was good news for all those people who were struggling to keep up with their mortgage and loan repayments.

How things can change in just a short space of time. Since April this year, inflation has started to rise alarmingly, mainly due to the increases in the cost of basic items such as food and fuel and now stands at a level of 3.8%, which is almost double the Governments target figure of 2%.

This has caused the Bank of England to rethink its strategy with regard to any further interest rate cuts, in the short term at least, and any hope of reduced monthly costs for those individuals with a mortgage seems to have evaporated as the Bank has stubbornly kept interest rates on hold at 5.0%.

The Bank of England’s Monetary Policy Committee (MPC) is the group responsible for deciding on a monthly basis what level the base rate of interest will be set at and most onlookers have awaited the outcome of these meetings with a certain amount of inevitability, as rates have remained constant.

However, the minutes from this months meeting have revealed that the MPC were split over their decision and although the majority voted for a hold on rates, there were also calls for a cut in order to help the housing market and those people with mortgages, as well as one vote for an increase of one quarter of a per cent to try and control inflation. We await with eager anticipation the outcome of next months meeting!