The Bank of England held its monthly committee meeting on Thursday regarding the base rate which is the standard for all interest rates from lenders. The Monetary Policy Committee decided to keep the base rate at the low level of 0.5% for another month. Minutes from the meeting released later in the month detail the votes of each committee member and explain the thoughts behind each member’s vote. Fundamentals of the current economy make it possible that a rate increase could happen sooner, compared with later, according to many experts.

The UK housing market is showing many signs of months of sustained growth. The minimum wage is now rising, and unemployment continues to decrease. This economic data points in the direction of a rise in base rate and subsequent rise in interest rates.

Although all indicators point to a rate increase, many believe that since the rate has remained at such a low level for so long, the first rate increase will take time to develop and be acted upon.

An economist with Scotiabank, Alan Clarke, believes that strong economic data, like an increase in average earnings and more growth in the service sector will lead to an eventual increase, but not to count on it happening right away.

Simon Wells economist with HSBC agrees and believes that if productivity becomes stagnant, an increase now in the base rate could lead to troubling issues next year. One possibility is additional wage pressure next year.

The housing market in particular is seeing growth currently, which could be severely hampered by an increase in base rate. House hunters as well as remortgagers are taking advantage of lower rates with each passing week.